Will Samsung (OTC:SSNLF) be able to turn the tide in the smartphone market? Well, at least in the U.S. that is? Globally, the South Korea-based company shipped some 90 million handsets in the second quarter - 80% of which were smartphones - with an ASP of $210. This compares to Apple's (NASDAQ:AAPL) most recent quarter, where it sold 40.4 million iPhones, although the iOS-maker toted a much higher ASP of $595.
While Samsung may have a tighter grip over the global smartphone market, it hasn't dominated the U.S. market in quite the same fashion. Apple, which controlled 43.9% of the market, according to comScore, tops Samsung's share of 28.4%.
For those interested, LG was third with a 9.7% share (makes you wonder where the other 18% is spread).
Anyhow, Samsung is hoping to boost that share, as it unveiled its Galaxy Note 7 smartphone at its Samsung Unpacked event in New York. The large-screen device boasts a slightly curved 5.7" screen and has packed in some features that it's hoping will appeal to consumers. It's got a stylus pen for its pressure-sensitive screen, retina scan and fingerprint reader, and a water-resistant display.
"The premium end of the smartphone market is the part that's growing," said David Lowes, Samsung Europe's chief marketing officer. "So we took a strategic decision to focus on the premium segment with the S6 and 7 Series, and they've done incredibly well for us."
So far, the strategy seems to be working, as revenues and profitability have seen a bump as a result. And while perhaps attacking the premium smartphone market is wise, it brings into question whether the company can start to erode Apple's market share or if it's fighting a losing battle.
Some may argue that Apple's year-over-year decline in iPhone sales is a sign that it is working. However, others will argue that Samsung is not taking share so much, as Apple had an enormous year of upgrades in 2015, making for far-too-difficult comps in 2016. I think it's the latter, but the holiday season will be more telling. Apple's iPhone introduction in September will also be a key event to watch.
Salesforce Snaps Up Quip
The M&A story line - following a number of headline-worthy deals on Monday - remains intact as Salesforce (NYSE:CRM) gets in the mix as well. The company jacked up the final bid for LinkedIn (NYSE:LNKD) by $6 billion or so, which was ultimately purchased by Microsoft (NASDAQ:MSFT) for $26.2 billion.
Shortly after that deal, Salesforce announced the acquisition of another company, Demandware (NYSE:DWRE) for roughly $2.8 billion in an all-cash deal last June. Now, Salesforce has announced that it will buy Quip for a reported $582 million in an all-stock deal.
Given that Salesforce was prepared to spend big bucks on LinkedIn - like, way more than the roughly $3 billion it spent on Quip and Demandware - it shouldn't be too surprising to see the company going on a bit of a spending spree.
It also shows where management's focus is. Demandware provides cloud-based digital commerce solutions, while Quip provides cloud-based word-processing and document-editing services.
In other words, the company is simply building out its cloud-based solutions. No surprises there. The question now becomes, is there another company on Salesforce's radar and if so, who?
Instagram Is Copying… Snapchat?
Snapchat (NYSE:SNAP) continues to gain momentum, particularly among the younger demographic. Last fall, Facebook's (NASDAQ:FB) Instagram platform was the most preferred social media platform among teens, garnering 33% of first-place votes. That figure dropped to 27% in the spring, knocking the app from the top spot.
Instead, Snapchat took over the leaderboard, albeit, barely with 28%. Still, it's an impressive move, considering the same platform garnered just 19% of first-place votes six months prior.
In 2013, Facebook tried to buy Snapchat for $3 billion. The idea (which didn't pan out) was met with a lot of opposition, with investors questioning how Snapchat can provide revenue, let alone earnings. (This argument went along similar lines when Facebook bought Instagram for $1 billion, which was initially booed by Wall Street).
At its latest funding round, Snapchat was worth around $20 billion, while estimates for Instagram have valued the property at more than $30 billion. Clearly, Zuckerberg is a genius.
Although Snapchat is quickly gaining ground, that hasn't stopped (and won't stop) Instagram from being an ad-displaying machine. Similarly, it also won't stop Instagram from borrowing some of the former's success.
The picture-sharing leader is launching Instagram Stories - yes, the strikingly similar feature found on Snapchat. "They deserve all the credit," said Instagram's CEO Kevin Systrom. At least the guy's honest. He went on to say that, in so many words, every platform is great for something and that borrowing features from each one is both common and acceptable. They're used in different ways on different platforms.
I like this guy - he tells it like it is. In any regard, Instagram is surely looking for a way to keep its users engaged. Not that it's doing a bad job by any means, as Facebook did grow revenues 60% last quarter. But still, the Zuck will want to keep all of his properties running at full speed and this is just another way to do so.
Twitter Management Continues to Churn
Twitter (NYSE:TWTR) is no stranger to C-suite churn, but the latest departure is somewhat surprising, perhaps just because of how long she was there. Natalie Kerris, Twitter's head of communications, has left after just six months of working at the company.
Leslie Berland, the company's chief marketing officer, will assume Kerris's communications responsibilities.
The reason for her leaving is unclear, but it doesn't shed the best light on a company that has reflected a lack of control towards Wall Street. Twitter was struggling near the end of former CEO Dick Costolo's tenure and the board searched and searched for a new CEO.
They insisted they wanted a full-time CEO, before ultimately bringing its founder Jack Dorsey back to the helm. Dorsey, of course, is the CEO of Square (NYSE:SQ) as well.
In late-January, the company had four senior executives leave, while two new board members were added. Jeff Seibert, the company's head of consumer products as of September 2015, left his role in June for Twitter's new app, Fabric. Others, like Jana Messerschmidt, head of business development, and Nathan Hubbard, head of media and commerce, left in May.
It doesn't help that Twitter's most recent earnings report missed revenue estimates and sales guidance fell well short of analysts' expectations.
As much as investors are hoping that the company's platform tweaks and new streaming deals spur user growth and increase user engagement, it still seems like the company is searching for rock bottom; searching for the right people that can form a team to lead Twitter's recovery. With the continual churn, though, it's hard to say that that's happened. The question is, has Wall Street already priced it in?
Fitbit Sees an After-Hours Rise
Shares of Fitbit (NYSE:FIT) are catching a boost after the close, currently up over 6% after the company reported earnings. Fitbit topped earnings per share and revenue expectations for the current quarter.
Revenues climbed some 46% from the same quarter in the prior year, but gross margin slipped 500 basis points to 41.8%. According to the press release, gross margins were impacted by an increase in "warranty reserves for legacy products." The company expects gross margins to return to a more normalized level next quarter.
Management expects revenues of $490 million to $510 million for next quarter and $2.5 billion to $2.6 billion for the full year.
While margins were somewhat concerning, the explanation makes sense, and the guidance came in about where analysts expected. That, and the fact that the stock has been such a dog, has likely got shares moving higher in what many could call a "relief rally."
Depending on where investors got long, the stock is either doing great, or doing terribly - most likely the latter. With a low of $11.65, the sub-$12 buyers have seen a double-digit return so far with the after-hours move toward $14.
But with a 52-week high north of $50, many investors are likely under water on their investment. When Fitbit came to market, it toted remarkable, triple-digit revenue growth and showed its profitability potential. That and the booming smartwatch/devices market enticed a lot of investors.
However, the story hasn't quite panned out as many had hoped. As of now, the after-hours gains are holding, and investors are hoping that the conference call doesn't reverse their fortune.
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