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Samsung slumps to 10-month low despite new product launch

August 17, 2015

SEOUL (Yonhap) — Shares of Samsung Electronics Co. fell to a 10-month low on Monday as its new high-end smartphones with wider screens unveiled last week failed to offset a negative outlook on its mobile business, analysts said.

Samsung Electronics dipped 3.16 percent to close at 1,104,000 won (US$933.14) on the main bourse, underperforming the broader index that shed 0.75 percent. It is the lowest closing price since October 2014 and a 24 percent drop from its yearly peak in March.

Foreign brokerage houses, including Merrill Lynch, Morgan Stanley and UBS, were at the top of the list of sellers on Monday.

Samsung Electronics extended its losses, although the world’s largest phonemaker on Friday showcased the Galaxy Note 5 and the Galaxy S6 Edge+ in New York in a bid to rev up sales in the face of Apple’s iPhones and cheaper phones by Chinese phonemakers.

The official sales will begin on Aug. 21 in the U.S. and Canada, and around the world later this month. The new products, however, have received a cold response from the market, dashing hopes that they will help boost sales in the latter half of this year.

“The launch of the two products may be hard to offset the sluggish sales of the Galaxy S6 and Galaxy S6 Edge,” said Park Young-joo, a researcher at Hyundai Securities. “Considering the increased marketing costs and price discounts on the previous models, the mobile division’s operating profit is expected to decline in the third quarter compared to the previous quarter.”

Samsung Electronics posted a near 8 percent drop in second-quarter net profit as its smartphone business remained tepid on lackluster Galaxy S6 sales and harsh competition from Chinese rivals.

Samsung took up 21.7 percent of the world’s market for smartphones in the April-June period, down from the 24.8 percent posted a year earlier, data compiled by industry tracker IDC showed. Other data also implied that its market share stood flat on-year over the cited period.

In contrast, Chinese tech firm Huawei last month announced that its global smartphone sales jumped 39 percent in the first half of this year, helping the firm to become the world’s fourth-largest handset maker.