Fears of Slowing Galaxy S4 Sales Sink Samsung
Samsung’s shares slipped some six percent Friday, dragged down by concerns about slowing sales of its flagship Galaxy S4 smartphone. The decline was the largest the company’s shares have charted in about nine months, and slashed its market capitalization by $12.4 billion to $187.8 billion.
The reason for the selloff? Fears that demand for the South Korean giant’s Galaxy S4 — the company’s fastest-shipping smartphone ever — might not be as strong as had been expected. According to a client note from J. P. Morgan Chase, orders for the S4, which went on sale last month, have slowed a bit.
“Compared to S3, S4 had stronger momentum in the first quarter of launch,” J. P. Morgan Chase analyst JJ Park explained. “But the following quarter’s shipment is expected to be disappointing and its peak-quarter number seems way below our previous estimates.”
And because of this, Park figures that Samsung will reduce its monthly orders for the device to seven million to eight million units, from 10 million. End result: S4 shipments for the year will top out closer to 60 million than the 80 million he originally forecasted.
Incidentally, Park’s not the only one sounding the alarm on S4 sales. Susquehanna’s Chris Caso made some cautious remarks about the device this week, as did Wedge Partners analyst Jun Zhang, who said today that he believes S4 sales have been roughly 20 percent short of Samsung’s target.