Samsung has been downgraded by brokers and as a result its shares have plummeted. Analysts partly blamed a slowing down in the sales momentum of the flagship Samsung Galaxy S4 smartphone, coupled with its own diluting of the brand with the launches of the Galaxy S4 Mini and Galaxy S4 Active.
The company's shares have closed at 6.2 down on Friday, 7 June. This represents the lowest price per share in four months and has knocked a staggering $12 billion off the manufacturer's market value.
Analyst Kim Young-chan from Shinhan Investment Group suggests that by targeting greater volume in sales with low to mid-range handsets, Samsung is affecting its profitability. "
"Sales of high-end handsets are lagging behind expectations, while low to mid-end handsets are selling briskly worldwide," he 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."
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Another analyst, Kim Hyun-yong at E*trade Securities claims that Apple rumours have also contributed to Samsung's downgrading "With Apple widely expected to announce an older iPhone trade-in programme and also a new, cheaper iPhone, overall growth prospects for [Samsung's] smartphone business have dimmed," he said.
"Second-quarter results will be solid but we have to see whether the trend can be sustainable, going forward."
Reuters reports that JPMorgan slashed its Samsung earnings estimates, claiming that monthly orders for the Galaxy S4 have dropped by between 20-30 per cent because of weak demand in Europe and Samsung's homeland of South Korea. Ratings agency Fitch is not planning to upgrade Samsung any time soon because of its heavy reliance on the consumer electronics market and, in particular, the smartphone business.
"Samsung has yet to prove its 'creative' innovation, that is, launching a product or a market segment that has not existed before in addition to prowess in manufacturing technology," it said.