Samsung loses US$ 12 b market value on smartphone worries

Monday, 10 June 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Samsung Electronics lost US$ 12 billion in market value on Friday, hit by brokerage downgrades that have underscored concerns about slowing sales of its flagship Galaxy S4 smartphone.

The share slide of more than 6% comes after it recently introduced two stripped-down versions of the S4, fanning worries that profit margins for its mobile business will suffer. It also follows a report that arch-rival Apple will begin a trade-in program for iPhones.

The new stripped-down S4 models will help it widen its lead in the global smartphone market and fend off Chinese competitors, but some fear that the South Korean tech giant is trading in profits for volume. Analysts say sales momentum for the high-end version of the S4, which became its fastest selling smartphone since it launch in late April, has slowed.

“Sales of high-end handsets are lagging behind expectations, while low to mid-end handsets are selling briskly worldwide,” an analyst at Shinhan Investment Corp Kim Young-chan said. “As the portion of low- to mid-range handsets is expected to increase in Samsung’s overall mobile phone business, this has also sparked concerns about thinning margins and lower growth.”

Apple will start a program this month to allow users to trade their older iPhones for the newest model, Bloomberg news agency cited people familiar with the plan as saying, first for the company as it prepares to introduce a new version of the smartphone.

Shares in Samsung finished down 6.2% at their lowest level in four months, wiping out 14 trillion won of value to bring its market cap to 210.2 trillion won.

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