Samsung Electronics loses $12 billion market value on smartphone worries

Fri Jun 7, 2013 5:14am EDT
 
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By Miyoung Kim

SEOUL (Reuters) - Samsung Electronics Co lost $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 percent 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 its 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," said Kim Young-chan, an analyst at Shinhan Investment Corp.

"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 ANGST

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, a first for the company as it prepares to introduce a new version of the smartphone.   Continued...

 
A man takes a photograph of a logo of Samsung Electronics Co Ltd's latest flagship smartphone S4 during its launch event at the company's headquarters in Seoul April 25, 2013. REUTERS/Kim Hong-Ji