Out of the Sky
On June 24, Samsung Electronics closed at 1.302 million won (US$1,173) per share in the stock market, losing 1.44 percent in a day and failing to continue to rise for the fifth consecutive trading session. During the session, its stock price reached as low as 1.291 million won (US$1,163) per share.
The bearish movement is because of securities analysts’ pessimistic forecasts about Samsung Electronics’ operating profits for the second quarter of this year scheduled to be announced in early July. Korea Investment & Securities adjusted its forecast downward from 7.717 trillion won (US$6.957 billion) to 7.046 trillion won (US$6.352 billion) on June 24, adding that the profits of every business unit but semiconductors are predicted to fall short of expectations. Likewise, NH Investment & Securities and IBK Investment & Securities cut their estimates from 7.302 trillion won (US$6.582 billion) to 7.007 trillion won (US$6.316 billion), and from 7.23 trillion won (US$6.52 billion) to 7.03 trillion won (US$6.34 billion), respectively. Nomura Securities reduced its forecast by 13 percent to 7.08 trillion won (US$6.38 billion), too.
According to financial information provider WISEfn, the average estimate fell from 7.4565 trillion won (US$6.7222 billion) to 7.3488 trillion won (US$6.6244 billion) between late March and early this month, and then to 7.2518 trillion won (US$6.5376 billion) on June 24. As recently as a month ago, Hyundai Securities, IBK Investment & Securities, and HMC Investment & Securities used to expect that it profits would exceed eight trillion won.
The drop in estimates can be attributed to sluggish smartphone sales. “It seems that the sales volume of the Galaxy S6 and the Galaxy S6 Edge have been less than expected, due to a supply shortage and consumer preference for the iPhone 6,” Mirae Asset Securities explained. Nomura Securities recently lowered its Galaxy S6 shipment estimates for the second quarter by three million to 18 million units.
Some experts say that Samsung Electronics should adopt a more proactive shareholder return. “Samsung is likely to face shareholders’ demands for more profits, given that its stock is currently undervalued,” Nomura mentioned, adding, “Ironically, the possibility of poor performance could catalyze policy to that end.”