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Samsung Confirms Rough Conditions for Smartphones and Tablets
The South Korean tech giant's earnings report is not instilling confidence.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

South Korean electronics giant Samsung (OTCMKTS:SSNLF) recently reported first-quarter earnings. Given the company's importance in the global tech market as both a component supplier and smartphone/tablet maker, its results are always worth watching.

Let's take a look at the highlights.

Revenue was KRW 53.7 trillion, while operating income was KRW 8.5 trillion, numbers that are slightly above the guidance (subscription required) issued in early April. Samsung's gross margin fell slightly to 40.3% from 40.6% last year, while its operating margin fell to 15.8% from 16.6%.

Mobile revenue was down 2.5%, and here's where things start looking not so pretty.

In developed markets, Samsung said handset channel inventory was up on "intensified competition." And in emerging markets, including China, "demand decreased."

Looking forward in smartphones, the high end will be fueled by early upgrade programs in North America and LTE (long-term evolution) expansion in China, but the low end is facing competitive pressure.

And in tablets, Samsung expects to see heavier competition in what it calls a "slowdown of growth trend." That makes a lot of sense, as we saw a major industry slowdown in Q4, while high-quality, low-priced tablets from the likes of Google (NASDAQ:GOOG) and Amazon.com (NASDAQ:AMZN) have completely flooded the market. And, of course, we can't forget that Apple (NASDAQ:AAPL) just reported March quarter iPad shipments that were well below expectations.

On the plus side, the company is expecting good things in its memory business, and it's seeing traction in the UHD TV market. Overall, however, Samsung's results support the idea that the mobile device industry is in a post-boom slowdown.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

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Position in AAPL.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Samsung Confirms Rough Conditions for Smartphones and Tablets
The South Korean tech giant's earnings report is not instilling confidence.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

South Korean electronics giant Samsung (OTCMKTS:SSNLF) recently reported first-quarter earnings. Given the company's importance in the global tech market as both a component supplier and smartphone/tablet maker, its results are always worth watching.

Let's take a look at the highlights.

Revenue was KRW 53.7 trillion, while operating income was KRW 8.5 trillion, numbers that are slightly above the guidance (subscription required) issued in early April. Samsung's gross margin fell slightly to 40.3% from 40.6% last year, while its operating margin fell to 15.8% from 16.6%.

Mobile revenue was down 2.5%, and here's where things start looking not so pretty.

In developed markets, Samsung said handset channel inventory was up on "intensified competition." And in emerging markets, including China, "demand decreased."

Looking forward in smartphones, the high end will be fueled by early upgrade programs in North America and LTE (long-term evolution) expansion in China, but the low end is facing competitive pressure.

And in tablets, Samsung expects to see heavier competition in what it calls a "slowdown of growth trend." That makes a lot of sense, as we saw a major industry slowdown in Q4, while high-quality, low-priced tablets from the likes of Google (NASDAQ:GOOG) and Amazon.com (NASDAQ:AMZN) have completely flooded the market. And, of course, we can't forget that Apple (NASDAQ:AAPL) just reported March quarter iPad shipments that were well below expectations.

On the plus side, the company is expecting good things in its memory business, and it's seeing traction in the UHD TV market. Overall, however, Samsung's results support the idea that the mobile device industry is in a post-boom slowdown.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

< Previous
  • 1
Next >
Position in AAPL.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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Samsung Confirms Rough Conditions for Smartphones and Tablets
The South Korean tech giant's earnings report is not instilling confidence.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

South Korean electronics giant Samsung (OTCMKTS:SSNLF) recently reported first-quarter earnings. Given the company's importance in the global tech market as both a component supplier and smartphone/tablet maker, its results are always worth watching.

Let's take a look at the highlights.

Revenue was KRW 53.7 trillion, while operating income was KRW 8.5 trillion, numbers that are slightly above the guidance (subscription required) issued in early April. Samsung's gross margin fell slightly to 40.3% from 40.6% last year, while its operating margin fell to 15.8% from 16.6%.

Mobile revenue was down 2.5%, and here's where things start looking not so pretty.

In developed markets, Samsung said handset channel inventory was up on "intensified competition." And in emerging markets, including China, "demand decreased."

Looking forward in smartphones, the high end will be fueled by early upgrade programs in North America and LTE (long-term evolution) expansion in China, but the low end is facing competitive pressure.

And in tablets, Samsung expects to see heavier competition in what it calls a "slowdown of growth trend." That makes a lot of sense, as we saw a major industry slowdown in Q4, while high-quality, low-priced tablets from the likes of Google (NASDAQ:GOOG) and Amazon.com (NASDAQ:AMZN) have completely flooded the market. And, of course, we can't forget that Apple (NASDAQ:AAPL) just reported March quarter iPad shipments that were well below expectations.

On the plus side, the company is expecting good things in its memory business, and it's seeing traction in the UHD TV market. Overall, however, Samsung's results support the idea that the mobile device industry is in a post-boom slowdown.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

< Previous
  • 1
Next >
Position in AAPL.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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