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Samsung Electronics faces descending increase as period looms


SEOUL (Reuters) – Smartphone personality Samsung Electronics Co Ltd faces a third true entertain of distinction decrease that could spin a fourth as cheaper models squeeze a bigger share of a negligence marketplace and Apple Inc readies a launch of a iPhone 6.

Samsung Electronics’ woes, exacerbated by a won that has risen to a six-year high opposite a dollar, come during an ungainly time for a flagship of South Korea’s largest conglomerate. The builder of a Galaxy smartphone is approaching to contend on Tuesday that gain approaching fell 12.6 percent for a entertain finished June, according to a Thomson Reuters I/B/E/S poll.

The group’s primogenitor Lee Kun-hee has been hospitalized given May following a heart attack, and a period map for his 3 children – including heir-apparent Jay Y. Lee – stays unclear.

“Samsung’s heyday has gone. Its distinction expansion was abnormally high for a past 3 to 4 years, and now that is normalizing,” pronounced Chang Sea-Jin, a business highbrow at Korea Advanced Institute of Science and Technology and author of a book “Sony vs Samsung”.

Analysts contend Samsung’s top-end Galaxy S5 handset, expelled in late March, is offered good though not good adequate to equivalent weaker shipments for low- and mid-tier devices. Its subsequent large product launch, a Galaxy Note 4, is approaching after this year though is not foresee by analysts to be a game-changer.

Its incursion into wearable inclination like a Gear smartwatch, meanwhile, stays during an early theatre and faces tough foe from Apple and others. That leaves Samsung Electronics underneath domain vigour and though a transparent new expansion motorist for a evident future.

“Samsung’s successor apparent has no sorcery wand. It’s not something he can tackle in one or dual years,” pronounced Chang.

Samsung has pronounced it will boost dividends, and those skeleton are approaching to be minute when full formula for a 3 months finished Jun are expelled after this month.

That might assuage investors who have sent a shares down about 5 percent this year, lagging a prosaic opening of a benchmark Korea Composite Stock Price Index.

Some analysts have also pronounced it could buy behind shares this year, partial of a broader organisation restructuring tied to succession.

“Obviously, profitable dividends is improved than nothing, though we doubt how most consequence there is to that given how tech companies are ostensible to be expansion stocks,” pronounced Um Joon-ho, account manager during Kiwoom Asset Management.

Samsung’s money cow handsets business is pang from negligence marketplace expansion and improving product peculiarity from Chinese manufacturers such as Huawei Technologies Co Ltd [HWT.UL] and Lenovo Group Ltd.

Research organisation IDC expects tellurian smartphone conveyance expansion this year to delayed to 19.3 percent from 39.2 percent final year, while normal sales prices are also seen falling.

Samsung’s first-quarter marketplace share fell to 30.2 percent from 31.9 percent a year earlier, according to IDC. Huawei and Lenovo gained share.

Samsung’s shipments were harm by an apparent pierce by Chinese carriers to foster cheaper internal brands, analysts said.

“If Samsung lowers a prices for a mid-to-low tier line-up, that will harm their short-term profits, though their competitors will have to condense prices too and might not be means to spin profits,” IBK Securities researcher Lee Seung-woo said.

“In a middle to prolonged term, this is a approach to vigour a competition.”

MANAGING EXPECTATIONS

Samsung’s arch financial officer recently warned that formula for a second entertain will be “not that good.”

Analysts concur.

Twenty-two of 38 polled have cut their gain forecasts given mid-June, according to Thomson Reuters data.

Some have forked to slower-than-expected take-up of 4G mobile services in China as a problem for Samsung in a April-June quarter. China Mobile Ltd, a country’s widespread carrier, reported 8.1 million 4G users during end-May, distant brief of a devise for 50 million by a finish of a year.

Compounding a problem is a strength of a South Korean currency, that was adult about 9 percent on normal opposite a dollar during a second entertain from a year earlier.

The normal foresee from 38 analysts surveyed by Thomson Reuters I/B/E/S tips 8.3 trillion won ($8.22 billion) handling distinction for a quarter, down from 9.5 trillion won a year earlier, and a weakest turn given a third entertain of 2012.

Sales are approaching to have slipped an annual 6 percent to 54 trillion won, that would be a initial such decrease given it adopted IFRS accounting standards in 2009.

For a full year, a check of 49 analysts foresee Samsung’s handling distinction would tumble around 7 percent to 34.2 trillion won, that would symbol a initial dump in 3 years.

While third-quarter formula are approaching to urge on a Jun quarter, handset sales might sojourn compelled as buyers wait for Apple’s next-generation iPhone before creation a decision. At slightest one chronicle of a device might be denounced around September.

($1 = 1009.6000 South Korean Won)

(Additional stating by Hyunjoo Jin; Editing by Tony Munroe and Stephen Coates)

Article source: http://www.reuters.com/article/2014/07/06/us-samsung-elec-guidance-preview-idUSKBN0FB0Y820140706

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