Alcaraz Research • Today, 1:56 PM
- Processors are not a top purchase driver among smartphone buyers. Using or not Using Qualcomm processors is of little influence in Samsung’s phone sales.
- The Exynos 7 Octa processor is good enough for the upcoming Samsung Galaxy 6.
- Xiaomi’s legal trouble with Ericsson might be good for Samsung’s global sales.
- Samsung is rumored to become the main supplier of application processors for Apple's new iPhone 7, replacing TMSC.
- Last week sources claimed Samsung was replacing Qualcomm's Snapdragon chip inside the Galaxy S5 for the Exynos which is made in-house.
- As Samsung grows its semiconductor business, I expect it to seek more market share in DRAM and NAND, hurting Micron.
- Micron remains a hold.
- BlackBerry's claim that it has not engaged in buyout talks with Samsung is strengthened by the release of the latter’s first Tizen smartphone in India.
- Samsung still sees potential in Tizen OS phones.
- The Samsung Z1 Tizen phone is cheaper than Google’s Android One handsets.
- Android apps can run on the Samsung Z1 through OpenMobile’s Application Control Layer technology.
Why Acquiring BlackBerry Would Make Sense For Samsung
- By acquiring BlackBerry, Samsung could find new avenues for growth, gaining credibility and deeper relationships with enterprise customers and users in highly regulated verticals.
- BlackBerry could help to give Samsung a leg up over Apple and Android devices, which still trails behind BlackBerry in terms of security.
- BlackBerry’s basic patents, which are likely to cover some foundation mobile communication technologies, could prove useful as a bargaining chip for Samsung in the event of litigation with rival manufacturers.
- Samsung will benefit a lot from owning BlackBerry.
- Samsung can use BlacKBerry's QNX and Elliptic Curve Cryptography assets to build the most secure Machine-to-Machine communication solutions.
- Samsung can outrun Google in the connected car segment if Samsung owns QNX. QNX is the leading OS in connected cars.
- Samsung warned that operating profit for December 2014 quarter-end was off 37%.
- Smartphone sales may still be in free fall amid competition from Apple, Xiaomi and Lenovo.
- Samsung is attempting to diversity its revenue stream, but investors should still avoid the stock.
Why Samsung Is Betting Big On The Internet Of Things
- Samsung intends to play a key role in the IoT market, with the intention to equip 90% of all its devices with IoT capabilities by 2017.
- According to research firm IDC, the global market for Internet of things-capable devices and services could cross $7 trillion by the year 2020.
- Trefis has a $1170 price estimate for Samsung, which is slightly below the current market price.
Samsung Dials Into Vietnam, Repositions Itself For Investors
- Samsung has decided to take on increasingly low-cost products by expanding its operations by $3 billion in Vietnam.
- Samsung enjoys a favorable regulatory environment in Vietnam with the government exempting them from corporate taxes for 4+ years.
- Although Samsung's results have been slightly disappointing, investors might consider the recent dip a buying opportunity.
- Samsung's consistent and increasing dividends could also be attractive for income-oriented investors.
Samsung Could Refocus Growth Strategy As Q3 Earnings Plummet
- Samsung's smartphone business faces its biggest test yet, challenged by the arrival of Apple's large-screen iPhones and increasing competition from budget offerings.
- Semiconductor operations did well, aided by strong DRAM and NAND memory shipments.
- The consumer electronics division was weighed down by seasonally lower sales for appliances and lower pricing for televisions.
Mobile Business Slump Forcing Samsung To Refocus Its Strategy
- Samsung’s pre-earning guidance for Q3 2014 indicated that sales and operating profits are declining due to an underperforming mobile segment.
- The company is losing market share, and is expected to face further declines, as competition in the market for Smartphones intensifies and smaller brands continue to outperform Samsung’s phones.
- Samsung’s chip business seems to be doing well and has reported strong growth in its pre-earnings guidance. In order to capitalize on this, the company has made a $15 billion investment in a new South Korean chip plant.
- Share prices have declined by nearly 20% in the past four months and the company has lost almost $45 billion in capitalization.
- Outlook for the stock seems to be bearish and investment is not recommended primarily because challenges in mobile (the main segment for the business) are going to continue.
With Sales In Freefall, Will Samsung Smartphones Go The Way Of BlackBerry And Nokia?
- Samsung warned that Q3 profit could decline by as much as 60% Y/Y. Its smartphone business is the worst performer.
- Smartphones are being hit on the low end by Chinese competitors and on the high end by Apple.
- Samsung's sharp decline is reminiscent of Nokia and BlackBerry, both of which once held commanding market share.
- If sales continue their freefall over the next several quarters, Samsung's smartphones could go the way of Nokia and BlackBerry.
Samsung's Chip Expansion Antagonistic For Micron? Wall Street, 'The Crowd' At Odds
- Wall Street and certain members of the crowd are at odds over Samsung's intentions for its new $15B chip plant.
- Analysts believe Samsung is gearing up to supply explosive demand in memory, in particular, demand for the 2015 iPhone.
- Certain crowd members believe Samsung could attempt to steal share in semiconductors to offset losses in mobile phones. I am riding with the crowd.
Samsung Warns Of Weak Third Quarter As Rivals Gain Momentum
- Samsung came out with a profit warning for the third quarter after disappointing in Q2.
- Rivals are pinching the company's market share on both the high and the low end.
- Apple's new iPhone is expected to put even more pressure on Samsung's sales.
- Samsung issued a profit warning, indicating that Q3 operating profit could fall 58%-62% y/y.
- Competitive pressure from AAPL and low-cost Android handset makers is the main driver behind the decline.
- OPM pressure is mostly due to ASP pressure rather than volume decline, suggesting much of the headwind comes from the low-end segment.
There are no Transcripts on SSNLF.
May. 19, 2014, 6:33 PM
- The Korea Times reports Apple (AAPL) and Samsung (SSNLF) are once more in talks to settle their far-reaching global patent battle. A source: "Samsung has recently resumed working-level discussions with Apple and the key issue is how to dismiss all lawsuits ... Some more time will be needed to fix terms of details such as royalty payments."
- The report comes after Apple reached a settlement with Google/Motorola Mobility that didn't feature a patent cross-license, and was awarded $120M in damages (less than a requested $2B) from a CA jury earlier this month in a Samsung suit. Apple is receiving undisclosed licensing fees from HTC as part of a 10-year settlement reached in 2012.
- Separately, 9to5 Mac reports new retail chief Angela Ahrendts is laying out "a three-part vision for the future of Apple retail: an emphasis on China, mobile payments, and completely revamping the end-to-end Apple Store sales experience."
- Apple has already said it plans to triple its Chinese store count to 30 by 2016, and has been reported to be working on a mobile payments service. As part of her retail overhaul, Ahrendts is reportedly interested in "blurring the lines between Apple’s online and physical stores."
May. 16, 2014, 7:39 PM
- Apple (AAPL) and Motorola Mobility (GOOG) have agreed to settle all outstanding litigation between the companies in a deal that (notably) doesn't feature a patent cross-license. Apple and Google have also "agreed to work together in some areas of patent reform."
- The settlement comes ahead of the $2.91B sale of Motorola Mobility by Google to Lenovo (LNVGY). Google has said it'll retail most of Motorola's sizable patent portfolio.
- Apple settled its legal battle with HTC in 2012. That agreement included a cross-licensing deal with undisclosed terms.
- Is Samsung (SSNLF) next? Apple's legal victories against Samsung haven't made a large dent in Samsung's balance sheet, nor done much to affect Samsung's Android phone sales. Apple and Samsung execs held mediated talks in February, and also reportedly discussed a settlement last year.
May. 14, 2014, 3:18 PM
- Sales of Samsung's (SSNLF, SSNGY) new Galaxy S5 flagship handset are outpacing the performance of the Galaxy S4 by 10%, with sales especially strong in developed markets such as the U.S., Australia and Germany, co-CEO J.K. Shin tells WSJ.
- Shin also believes strong Galaxy S5 sales will lead to higher mobile profit margins and market share in the current quarter.
- Buyers may be attracted to the product's practical features, Shin says; the Galaxy S5 is water resistant and included a power-saving feature that allows users to keep the phone going for another day with just 10% of battery life left.
- The comments paint a rosier picture of Samsung's mobile business than many analysts and investors had been expecting.
May. 13, 2014, 10:35 AM
- Korea's Naver.com reports Samsung (SSNLF) plans to launch the Galaxy S5 Prime, a version of its flagship phone that features a 2K (2560x1440) display, in mid-June via local carriers SK Telecom, KT, and LG U+. The phone will reportedly cost just $50-$60 more than the regular S5.
- There were reports the S5 would sport a 2K display prior to its launch. Samsung instead went with the 1080p resolution used for the S4, albeit with an improved OLED panel that has received good reviews.
- Samsung stated last November it plans to launch phones with 2K displays in 2014, and phones with 4K displays in 2015. Universal Display (OLED -0.1%) wouldn't mind seeing that happen, given OLED panels with higher resolutions require more OLED materials.
- Naver's report doesn't state whether the S5 Prime will feature a metal case, as has been previously rumored. Samsung has received its share of criticism for sticking with plastic cases for its high-end phones, and the company recently replaced its mobile design chief.
- Apple, a fan of using aluminum cases (the plastic 5C excepted), is expected to launch 4.7" and 5.5" iPhones in 2H14.
May. 12, 2014, 12:10 PM
- The South Korean colossus is investing $2B in the biotech arena in an effort to drive growth from its $347B revenue base. Its main initial focus will be biosimilars with a planned 2016 launch in Europe of an Enbrel biosimilar and a 2017 launch of a Remicade biosimilar.
- The global market for biosimilars, while lagging in the U.S. due to regulatory uncertainty, is expected to grow to $24B by 2019.
- According to unit chief Christopher Hansung Ko, "Our mandate is to become No. 1 in everything we enter into, so our long-term goal is to become a leading pharmaceutical company in the world."
- Related tickers: (IBB) (JNJ) (AMGN) (BIIB) (XBI) (SSNLF) (SSNGY)
May. 11, 2014, 4:47 AM
- Samsung Electronics (SSNLF) Chairman Lee Kun Hee has had a heart attack but is in a stable condition in hospital after receiving surgery for an acute myocardial infarction.
- Since becoming chairman of Samsung in 1987, Lee has turned the company into the world' largest maker of smartphones, televisions and memory chips, with shares soaring 137-fold.
- Lee also heads Samsung Group, which has over 74 affiliated companies, including the electronics firm.
- The heart attack has prompted the issue of succession to be raised. A frontrunner to take over from Lee, who is 72, is his son Jae Yong, who was appointed Vice Chairman of Samsung Electronics in 2012.
May. 6, 2014, 3:52 PM
- Digitimes reports Samsung (SSNLF) "putting in weaker-than-expected handset component orders to the supply chain" amid toughening competition, particularly in China. The site adds Samsung, which last month launched its latest flagship (the Galaxy S5), is mostly expected to cut orders for cheaper smartphones.
- The report comes a few days after InvenSense (INVN -2.8%) offered a soft June quarter outlook, while estimating Samsung will return to accounting for a mid-30s % of revenue after making up 47% of March quarter sales.
- Strategy Analytics estimates Samsung saw its smartphone share fall 120 bps Y/Y to 31.2% in Q1 (89M shipments out of 285M), following many quarters of steady share gains. Strategy also estimates Lenovo (LNVGY) grew its share to 4.7% from 3.9%, and that Huawei's share was steady at 3.9%.
- Other Chinese OEMs, including Xiaomi, ZTE, and Coolpad, have also been seeing healthy shipment growth amid an industry mix shift towards cheaper phones aimed at emerging markets. Xiaomi (also a major InvenSense client) is looking to roughly double its shipments in 2014 to 40M.
- Other suppliers with heavy Samsung exposure: OLED, MXIM, SYNA, ANAD.
May. 5, 2014, 2:13 PM
- The Nikkei reports Samsung (SSNLF) has scrapped plans to build an OLED TV plant due to yield challenges and pricing concerns. Universal Display (OLED -7.7%) shares aren't taking the news well.
- Samsung, by far the world's biggest producer and (via its phone unit) consumer of OLED panels, is reportedly thinking of building a new plant to make small/mid-sized OLED panels for mobile devices. But it also likely won't release new OLED TV sets "for a while."
- Samsung and LG have launched OLED sets that are thinner and lighter than LCD alternatives (owing to their lack of a backlight), and which have earned praise for their brightness and picture quality. But sky-high price tags have relegated the sets to niche status. DisplaySearch estimates only 4,400 sets were sold last year.
- Sony and Panasonic called off an OLED TV JV last December.
May. 2, 2014, 11:27 PM
- Apple (AAPL) was awarded only $120M in damages from Samsung (SSNLF) late Friday by a federal jury, far short of the ~$2B it had sought and a major disappointment in its mobile smartphone patent litigation.
- Though the verdict would appear large by normal standards, it is widely seen as a victory for Samsung: "The amount is less than 10% of the amount Apple requested, and probably doesn’t surpass by too much the amount Apple spent litigating this case," says one legal analyst.
- The jury rejected Apple’s claim on the patent that enables updating of applications while other features of the phone are in use; Apple also lost its claim over a patent that allows a user to perform a universal search for information with a single click.
May. 2, 2014, 12:43 PM
- Citing strong phablet sales and extended upgrade cycles (something CIRP has already observed), IDC estimates global tablet shipments only rose 3.9% Y/Y in Q1 to 50.4M units. That's a marked slowdown from Q4's 28.2% growth, and also below IDC's full-year growth forecast of 19.4%.
- Worth noting: Q1 comps were especially tough, given IDC estimated year-ago shipments were up 142% Y/Y. Easier comps for later quarters could help growth rebound a bit.
- Apple (AAPL +0.3%), which last week reported its Q1 iPad units fell 16% Y/Y to 16.4M (Tim Cook partly blamed inventory changes), saw its share drop to 32.5% from 33.2% in Q4 and 40.2% a year ago. With the iPad's ASP at a steep $465, Apple's revenue share might still be above 50%.
- Android (GOOG) tablets now make up ~2/3 of shipments - that's a positive for Google's traffic acquisition costs, given the huge Mobile Safari search ad payments it makes to Apple.
- Samsung (SSNLF) grew its share to 22.3% from 18.8% in Q4 and 17.5% a year ago. Asus (ASUUY) had 5% of the market vs. 5.4% a year ago, and Lenovo (LNVGY) grew its share to 4.1% from a mere 1.3%.
- While tablet growth slows, IDC has estimated the ongoing decline in PC shipments narrowed to 4.4% in Q1. Garner estimated a mere 1.7% drop.
Apr. 30, 2014, 10:49 AM
- Digitimes reports Micron (MU +2.7%) will likely hike DRAM prices in May "due to low inventory levels in the supply chain and insufficient supply of memory chips from Samsung Electronics (SSNLF) and SK Hynix (HXSCL)"
- Samsung is said to be dealing with low yields for its new 25nm DRAM process, leaving it unable to fulfill orders from PC OEMs, and Hynix's efforts to restart production at its fire-damaged Wuxi, China fab have reportedly been slowed by the installation of new machinery.
- DRAM prices surged last year as industry consolidation, restrained capex, and strong mobile DRAM demand led to a favorable supply/demand balance. David Einhorn's bull case for Micron is based in large part on a belief consolidation will produce long-term changes in the industry supply and pricing dynamics.
- Yesterday, Samsung reported Q1 memory (DRAM + NAND) sales of 6.29T won ($6.08B), -3% Q/Q (mobile seasonality) but +23% Y/Y. The company added PC DRAM demand is stabilizing, and that SSD and high-density memory card sales are boosting NAND demand.
- Samsung expects a "balanced" DRAM supply/demand environment in 2014, and strong PC and data center SSD demand to fuel NAND growth.
Apr. 29, 2014, 2:32 AM
- Samsung's (SSNLF) Q1 operating profit fell 3.3% to 8.49T Korean won ($8.2B) but topped consensus of 8.4T won.
- Net profit excluding minority interests grew 7.3% to 7.48T won ($7.2B) and beat forecasts of 6.75T won, while revenues increased 3% to 53.68T won.
- Operating profit at Samsung's mobile division fell 1.2% to 6.43T won ($6.2B) but surpassed expectations of 5.9T won, with the company shipping 113M phones and tablets. Margins were unchanged at 19.8%.
- Operating earnings breakdown at other units: chip business almost doubled to 1.95T won from 1.07T won; display swung to a loss of 80B won from a profit of 770B won, hurt by increased costs for a production ramp-up and falling selling prices; TV and home-appliances 190B won.
- Samsung forecasts that profits will rally in Q2 and beyond, lifted by strong sales of its new Galaxy S5 flagship device - which are expected to outstrip those of the S4 - as well as "improved sales of display panels and home appliances." (PR)
Apr. 18, 2014, 5:03 AM
- Globalfoundries has agreed to license Samsung's (SSNLF) most advanced chipmaking technology, 14-nanometer FinFET, in a co-operation deal that analyst Jim McGregor says poses "a huge competitive threat" to Taiwan Semiconductor Manufacturing Co. (TSM), which controls around half of the $38.9B chip-foundry sector.
- The collaboration could also make it more difficult for Intel (INTC) to gain a strong position in the foundry business, McGregor says.
- The tie-up "provides an alternative to those companies that are looking to use leading-edge production." That could affect chip designers such as Qualcomm (QCOM).
Apr. 14, 2014, 2:53 PM
- U.S. first-day Galaxy S5 sales were up 30% relative to first-day S4 sales a year ago, Samsung (SSNLF) declares. The electronics giant also states sales in certain other markets doubled Y/Y.
- Pac Crest's checks also paint a favorable picture of U.S. S5 sales: The firm estimates average inventory sell-through hit 60% within four hours, and thinks sales were especially strong at Verizon thanks to a 2-for-1 promotion.
- Needham thinks S5 sales could reach 10M sales in 25 days vs. 27 for the S4. The firm is reiterating a Buy on touch controller/fingerprint sensor supplier Synaptics (SYNA +3.7%).
- Two caveats: 1) Samsung's numbers typically measure sell-in to carriers/distributors rather than consumer sell-through. 2) S4 sales also got off to a hot start, but later slowed down.
- Compared with the S4, Samsung has taken a no-frills approach with the S5, emphasizing practical features such as waterproofing/dust-resistance over sensor-based features (Smart Pause, Smart Scroll, etc.) often derided as gimmicks. The company has also provided modest discounts relative to the S4 (the S5 still typically goes for $600+ unsubsidized), as it contends with aggressive high-end pricing from Chinese Android rivals.
- Synaptics is outperforming, as is motion sensor supplier InvenSense (INVN +1.7%), which gets over 30% of its revenue from Samsung. S5 OLED materials supplier Universal Display (OLED +0.6%) is up slightly. Synaptics reports on April 24, and InvenSense on May 1.
Apr. 11, 2014, 3:37 AM
- Samsung (SSNLF) is starting sales of its latest flagship phone in 125 countries today, although the launch of the Galaxy S5 seems to lack the buzz of previous smartphone debuts.
- Samsung is even apparently pricing the device below its predecessor. "It reflects the trend of smart phone commoditization," says researcher Tom Kang.
- The company is also offering up to $600 of incentives to persuade consumers to buy the phone, including PayPal vouchers, a LinkedIn premium account and at least four fitness-related apps.
- Despite the Galaxy S5 being able to withstand being submerged in water, some critics appear to be underwhelmed.
Apr. 8, 2014, 3:24 AM
- Samsung's (SSNLF) Q1 operating profit fell for the second quarter in a row in Q1, dropping a preliminary 4.3% to 8.4T won ($7.96B) and vs consensus of 8.5T won.
- Sales rose slightly to 53T won from 52.87T won and vs expectations of 54.58T won.
- Samsung released its Q1 estimates ahead of the global launch of the Galaxy S5 on Friday amid criticism that the device doesn't have any overly interesting new features.
- Shares fell 0.2% in Seoul. (PR)
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