Bloomberg News

Samsung Falls After JPMorgan Cuts Estimates on S4: Seoul Mover

June 07, 2013

Samsung Electronics Co. (005930), the world’s largest smartphone maker, fell the most in more than nine months in Seoul after analysts at JPMorgan Chase & Co. cut profit estimates, citing slowing demand for its flagship Galaxy S4.

The shares declined 6.2 percent to 1,427,000 won as of the close of trade, the largest drop since Aug. 27. The stock was the biggest drag on the MSCI Asia Pacific index.

Orders for the S4 smartphone, which went on sale last month, are slowing on weak demand in Europe that may impact profit margins, analysts led by JJ Park said in a report dated yesterday, citing supply chain checks. JPMorgan cut its share-price estimate for Samsung by 9.5 percent to 1.9 million won and lowered its 2013 earnings estimates by 9 percent.

“Compared to S3, S4 had stronger momentum in the first quarter of launch,” the analysts wrote, affirming their overweight rating on the stock. “But the following quarter’s shipment is expected to be disappointing and its peak-quarter number seems way below our previous estimates.”

JPMorgan now expects Suwon, South Korea-based Samsung’s shipments of the S4 to be 60 million this year, compared with a previous estimate of 80 million. Samsung sold 10 million units of the S4 within 27 days, the company said.

It also unveiled a smaller, less-powerful version of the phone last week.

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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