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- 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 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.
- Samsung Galaxy Note prices will drop at a higher rate following a launch based on historical trends.
- Samsung is pressured by competitive dynamics, commoditization and falling smartphone subsidies.
- These factors put Apple in a much better position to gain market share and reasserts why Apple will continue to outperform Samsung as an investment.
- Apple has been able to design and market superior products over time by keeping the vast majority of design and development in-house.
- Also, Apple’s upcoming iPhone 6 and 6 Plus will have a higher blended average selling price, which will drive sales growth in future quarters.
- Samsung shares have fallen 17% over the past year and trade at just 8x 2014 estimated earnings (6x excluding cash).
- Investors are so concerned about the mobile phone business, the current share price implies a valuation of zero. Similarly, investors are concerned about the low dividend and lack of buybacks.
- An activist investor could potentially unlock value through a partial spin off of the phone business and using excess cash to repurchase cheap stock.
- Taking these simple actions could dramatically increase Samsung's stock price. Shares look to have 90% upside.
- Samsung’s first budget Tizen phone may launch in India the last quarter of 2014.
- Google’s alleged mandatory order to OEMs to pre-install 20 Google apps on Android phones is strong incentive for Samsung to redouble its Tizen OS efforts.
- Samsung did right in choosing India for its first Tizen phone. Samsung is still the No.1 smartphone brand in India.
Samsung Needs Galaxy S6 At This Point To Stand Out
Google's Android One Initiative: The Impact On Samsung
- Through Android One, Google is looking to improve the user experience on low-priced smartphones, enticing customers in emerging markets to upgrade.
- We believe the move could pose a threat to Samsung, the world's largest smartphone manufacturer.
- The initiative could potentially compound Samsung's market share woes in emerging countries, where we expect much of the growth in the smartphone market to come from.
- Samsung now reminds me of Apple of about a year ago. Apple stock price increased more than 50% since then.
- Looking past the current events of shrinking market share and lower profits, we find Samsung deeply undervalued.
- Using DCF valuation makes me believe Samsung is a great long-term opportunity.
- Samsung’s smartphone business has gravely suffered from the rapid ascent of Xiaomi.
- Xiaomi displaced Samsung as the top vendor in China. Global expansion plans for Xiaomi means Samsung’s market share in other countries also will likely decline.
- The two biggest mobile carriers in the Philippines now offer free Xiaomi Mi 3 to their post-paid subscribers. Carrier support will add to the massive growth of Xiaomi.
There are no Transcripts on SSNLF.
Thu, Dec. 11, 1:54 PM
- Thanks to Apple's huge A8 CPU orders, TSMC (TSM +0.6%) had November revenue of $2.32B, -10.5% M/M (seasonality) but +64.1% Y/Y. October sales were up 55.9% Y/Y.
- Sources tell Digitimes sales are also expected to fall M/M in December, but add TSMC is still set to hit Q4 revenue guidance of NT$117B-$120B ($3.74B-$3.84B).
- Meanwhile, Samsung (OTC:SSNLF) has begun producing chips using its next-gen 14nm FinFET process for an unnamed client (quite possibly Apple), a little earlier than expected. The process is expected to be used to make Apple's A9 CPU (going into 2015 iDevices), as well as upcoming Qualcomm processors.
- TSMC might also be responsible for some A9 output, via its 16nm FinFET process (set to enter mass-production in Q2 2015).
Thu, Oct. 30, 6:37 AM
- Samsung Electronics (OTC:SSNLF, OTC:SSNGY) reports that its net profit nearly halved during Q3, as its mobile business continued to face heavy competition from low-cost Chinese smartphone makers.
- Net profit during the quarter ended in September fell 49% Y/Y to 4.2T won ($4B). That followed a 20% profit decline in the previous quarter.
- Samsung also warned that uncertainty remains for its mobile business in the current quarter, since it will have to boost its marketing efforts to counter an anticipated year-end surge in competitors’ smartphone launches.
Mon, Oct. 6, 8:01 PM
- Samsung (OTC:SSNLF, OTC:SSNGY) expects to report a Q3 op. profit of KRW4.1T ($3.8B), down 60% Y/Y and well below a KRW5.6T consensus. Revenue is expected to total KRW47T ($44B), down 20.5% Y/Y and below a KWT50.9T consensus.
- The Korean electronics giant blames weak mobile sales and a declining smartphone ASP. With its efforts to differentiate via proprietary software/services running on top of Google's Android often falling flat, Samsung has been losing share to Chinese OEMs offering aggressively-priced low-end and mid-range devices. More recently, it has also had to deal with the iPhone 6/6 Plus launch.
- The Q3 warning comes on the heels of July's soft Q2 numbers.
Mon, Jul. 7, 11:43 PM
- Samsung (SSNLF, SSNGY) expects to report Q2 revenue of KRW51T-53T ($50.4B-$52.4B), and an op. profit of KRW7T-7.4T ($6.9B-$7.3B). Those guidance ranges are below Bloomberg consensus estimates of KRW53.2T and KRW8.1T.
- The electronics giant blames "mid-to-low end" phone competition in China and Europe, a strong won, and higher marketing spend aimed at lowering phone inventories.
- Also, tablet shipments fell more than expected due to a weak market, and mobile weakness had a spillover effect on internal display and chip sales.
- Samsung is facing intensifying low-end/mid-range smartphone competition from Chinese OEMs pricing aggressively - its smartphone share fell Y/Y in both Q1 and Q4 (per IDC) following a long run of share gains, while Huawei and Lenovo each grew rapidly. Xiaomi, which shipped 26.1M phones in 1H14 (+271% Y/Y), is also a growing threat.
- The tablet weakness comes after the market's growth slowed to a trickle in Q1. Notably, Samsung states phablets are cannibalizing 7"-8" tablets, and a lack of carrier subsidies is leading to low upgrade rates (previous).
- Samsung is "cautiously" optimistic about Q3. It expects hardware refreshes to boost smartphone sales, and for display and memory chip sales to also rise.
- Shares are up 0.5% in Seoul. Investors have been expecting soft Q2 numbers.
Wed, Jun. 25, 7:32 AM
- Execs at Samsung (SSNLF) are not expecting great results this quarter, after announcing that company performance has been declining. Shares have fallen 8.5% so far this month, after a string of downgrades in earnings forecasts.
- “It doesn’t look too good,” says CFO Lee Sang-hoon, in reference to second quarter results.
- The company is scheduled to report its second-quarter earnings estimates in early July.
Tue, Apr. 29, 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)
Tue, Apr. 8, 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)
Fri, Jan. 24, 2:08 PM
- Chip equipment stocks aren't getting spared from a general market selloff after Samsung (SSNLF - the world's #2 chipmaker) guided for its 2014 chip capex to be flat Y/Y. AMAT -1.6%. LRCX -3.7%. ASML -0.7%. UTEK -2.2%. RTEC -3.2%. MTSN -5.1%.
- Industry analyst Robert Marie observes this is the first time since 2009 that Samsung hasn't upped its chip capex budget. With Intel and TSMC (the industry's two other big clients) also guiding for capex to be flat (if not down) this year, Marie is cautious about 2014 growth, even though others have forecast sales will rebound sharply this year following a rough 2013.
- KLA-Tencor (KLAC -2.2%) is joining the selloff even though the company posted an FQ2 EPS beat yesterday afternoon, and provided healthy FQ3 guidance - revenue of $790M-$850M and EPS of $1-$1.20 vs. a consensus of $814.5M and $1.11 - on its CC (transcript). KLA also forecast FQ3 bookings will be in a range of $700M-$800M (implies 10% Q/Q growth at the midpoint), and struck an upbeat tone about 2014 investments in 20nm and 3D NAND flash capacity.
- KLA still expects 10%+ industry growth this year, but admits its outlook is "slightly weaker" than it was three months ago. The company also believes industry adoption of EUV lithography (important for ASML) has generally been pushed out to the 7nm process node from the 10nm node.
Fri, Jan. 24, 2:21 AM
- Samsung's (SSNLF) net-profit growth slowed significantly in Q4, rising 5.4% on year to 7.3T ($6.7B) won vs an increase of 25.6% in Q3.
- Sales increased 5.7% from a year earlier to 59.3 trillion won.
- Operating profit -6% to 8.31T won, the first drop in two years.
- The company warned that it will be "challenging" to improve its earnings in Q1, "as the weak seasonality of the IT industry will put pressure on demand for components and TV products."
- The strength of the Korean won hurt earnings by 700B won ($651M), and the company took an 800B won one-time charge related to employee bonuses.
- Operating profit at Samsung's mobile unit was flat on year at 5.47T won but down from a record 6.7T won in Q3, hurt by the release of new iPhones.
- Samsung expects Q1 smartphone shipments to rise at a "mid-single digit" pace on quarter and tablet shipments at a "high single-digit" rate.
- Further operating profit breakdown: chip division rose to 1.99T won from 1.42T won a year earlier; display plunged 90% to 110B won, dragged down by weaker-than-forecast sales of the Galaxy S4 and poor demand for TVs; consumer-electronics dropped to to 660B won from 700B won.
- Samsung intends to spend a similar amount on capex in 2014 as in 2013, when it invested 23.8T won.
- Shares closed +3% in Seoul.
Tue, Jan. 7, 2:22 AM
- Samsung (SSNLF) suffered its first fall in profits in nine quarters in Q4, with the company's operating income dropping to a provisional 8.1-8.5T won ($7.6-8B) from 8.84T won a year earlier and missing consensus of 10T won.
- Revenue increased 5.3% to 58-60T won from 56.1T won but undershot forecasts of 61.5T and represented the slowest growth since 2011.
- The decline in profits comes amid stiff competition at the high and low ends of the smartphone market, and after greater-than-expected bonus payments to workers.
- Samsung's full results are due out on January 24.
- Shares dropped 0.2% in Seoul. (PR)
Oct. 25, 2013, 2:21 AM
- Samsung's (SSNLF, SSNGY) Q3 net profit, excluding minority interest, jumped 25% to 8.05T won ($7.76B), above forecasts of 7.94T won.
- Sales climbed 13.2% to 59T won.
- Operating profit +26% to 10.16T won, but that represents a slowdown from 47.5% growth in Q2.
- Operating profit at the mobile unit rose 19% to 6.7T won, with smartphone shipments climbing in the "mid-10% range" and tablet sales in the "mid-20%" range.
- Operating profit at the chip division more than doubled to a three-year high of 2.06T won, boosted by stronger chip prices and tighter supply
- Income at the consumer-electronics division dropped to 3450B won from 400B won, while earnings at the display division fell to 980B won from 1.17T.
- Samsung expects an extra $1.5T won ($1.4B) payment from Corning (GLW) after the latter agreed to acquire the South Korean company's display unit out of their LCD glass joint venture.
- Samsung's shares -0.2% in Seoul. (PR)
Oct. 4, 2013, 2:19 AM
- Samsung (SSNLF.PK) has estimated that its operating profit climbed 22.8-27.8% to another quarterly record of 9.9-10.3T won ($9.2-9.6B) in Q3, in line with consensus of 9.96T won.
- The company expects that sales grew 11-15% to 58-60T won vs forecasts of 59.7T won.
- Samsung didn't provide estimates for net income or earnings for each division. Its final results are due out at the end of the month.
- "Despite record-high earnings, doubts over the sustainability of smartphone-driven profits hint at an overall valuation discount for Samsung," says HMC Investment & Securities analyst Greg Roh.
- Shares +0.6% in Seoul.
Aug. 9, 2013, 10:45 AM
- Samsung (SSNLF.PK) and affiliate Cheil Industries (a maker of OLED materials) are buying German OLED materials/tech provider Novaled for €260M ($347M).
- Cheil's CEO promises the deal will yield major OLED R&D synergies. Samsung says it's paying ~10x revenue.
- Universal Display (OLED +13.4%) shares, which dove last week on a Samsung/Novaled report, and partly rebounded after analysts argued Novaled's offerings are complementary, is below yesterday's AH highs, but remain sharply higher in response to its Q2 beat and strong full-year guidance.
- Universal mentioned on its Q2 CC sales of green host materials (used in newer Samsung phones, including the Galaxy S4) rose 192% Q/Q and over 6x Y/Y to $9M. Likewise, green emitter sales rose 186% Q/Q and over 8x Y/Y to $13.1M. Red emitter sales totaled $3.6M, +25% Q/Q but -29% Y/Y.
- The company added product mix and price cuts impacted its materials gross margin, and that there could be some additional margin pressure if host materials sales "proportionally grow faster" than emitter sales.
Jul. 26, 2013, 3:11 AMMore on Samsung (SSNLF.PK) Q2: Chip business, which accounts for 18% of operating profit, enjoys 71% increase in income to 1.76 won. Profit at display division +58% to 1.12T won. Consumer-electronics income 430B won vs 730B won last year as TV prices fall. Ends Q2 with 33.2T won in cash. To increase capex 5.3% this year to 24T won, including 13T won to expand its chip facilities. (PR) | Comment!
Jul. 26, 2013, 2:43 AMSamsung (SSNLF.PK): Q2 net profit +50% to another record of 7.6T won (US$6.8B), Revenue +20.7% to 57.46T won. Operating profit +47.5% to 9.53T won, with income at the mobile unit rising to 52% to 6.28T won; however, operating-profit margin at the division drops to 17.7% from 19.8% in Q1, and the company expects smartphone prices to slip in Q3 due to increase in sales of mid- and low-end phones. Shares -0.9% in Seoul. (PR) | Comment!
Jul. 8, 2013, 4:25 AM
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