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Samsung market value slumps on falling earnings


Samsung on Thursday reported earnings that missed analyst estimates, with profit falling 18 per cent on stagnating phone shipments. Photo: Bloomberg

Seoul: Samsung Electronics slumped a second day in Seoul, pushing the loss of market value for the world's biggest smartphone maker to $15 billion since posting its smallest profit in two years.

The stock has dropped 7.4 per cent, wiping off more than the market value of Korean rival LG Electronics, since Samsung on Thursday reported earnings that missed analyst estimates, with profit falling 18 per cent on stagnating phone shipments.

Samsung's dominance is under threat as Apple lures high-end buyers and Chinese vendors including Xiaomi and Huawei Technologies attract budget consumers with feature-packed devices at lower prices.

The maker of Galaxy smartphones, which has about $58 billion of cash, was the only one of the top five producers to post lower shipments in the June quarter as its market share shrank 7.4 percentage points, according to data from Strategy Analytics.

"Samsung has not only missed the market earnings' estimate but it also failed to meet investors' expectation on its much- awaited dividend payouts," Ko Jung Woo, a Seoul-based analyst at BS Securities Co., said by phone. "There's nearly no growth-driven catalyst to boost shares now."

Samsung on Thursday said it will pay an interim dividend of 500 won per share, the same amount it's paid in eight of the past nine years, according to data compiled by Bloomberg.

Shares of Samsung fell 3.8 per cent to 1,292,000 won on Friday. The stock has dropped 5.8 per cent this year, compared with a 3.1 per cent advance in the benchmark Kospi index, of which it's the largest component. That's the company's biggest two-day drop in almost two years.

Aggressive response
Samsung was cut to neutral at UBS after the result. Nicolas Gaudois, an analyst, said it's hard to see a profit improvement in 2015 for the company as he cut his share price forecast 3.3 per cent to 1,450,000 won.
The company said it plans to aggressively respond to competition for cheaper devices in China while Apple is said to be preparing iPhones with larger screens, challenging a market Samsung pioneered with its Note devices.

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