Not Paying Off
A sharp drop in demand for the Galaxy smartphones of Samsung Electronics has led to a drop in its stock prices for five months in a row, forcing its stocks lose about 52 trillion won (US$44 billion) in the stock market. According to Bloomberg, the Korean smartphone giant saw its stock price drop 8.1 percent in Aug., the longest period of consecutive monthly drops since 1983. Its market capitalization slid by about US$12 billion in Aug. This is because Apple and Chinese competitors have chipped away at its market share. Samsung’s gambit to launch a new smartphone ahead of Apple failed to take care of skepticism about its earnings in the second half of this year.
In the world smartphone market, Samsung’s share fell by at least 3 percent in the second half of this year. The company is no longer the market leader in China, which is the world’s largest smartphone market. In fact, in the second half of this year, Samsung accounted for 9.0 percent of the Chinese market and was relegated to fourth place by Chinese companies such as Xiaomi (15.8 percent) and Huawei (15.4 percent). Samsung’s smartphones are sandwiched between high-priced Apple iPhones and mid to low-priced products of Xiaomi, Lenovo, and Huawei. The Galaxy S6 hit the market in April, but has not performed as the company hoped. Some consumers criticized the Galaxy S6 for disabling battery changes and dropping the ability to access the storage expansion slot and add storage. Apple is scheduled to launch a new iPhone in September to target the Christmas season at year’s end. “Everybody knows that Samsung’s smartphone business is going through a slump,” a stock market analyst said. “We cannot predict when the drop will end.”