Losing Money
Samsung Electronics’ market capitalization dipped below 200 trillion won (US$190 billion) again. Its stock price fell close to 9% in just five trading sessions since December 24 last year, due to concerns over its Q4 performance. Although not a few experts have a consensus that the drop is somewhat excessive, it is also said that it will take time for Samsung Electronics to achieve a turnaround.
On January 2, Samsung Electronics’ share price fell 4.59% from the previous session to close at 1.309 million won (US$1,246) and 9.28 trillion won (US$8.8 billion) of market capitalization went up in smoke on that day alone. The drop amounts to 17.36% when compared to the previous high share price of 1.584 million won (US$1,507), which was recorded on January 3, 2013, one year ago. The sudden drop can be attributed to a potential earnings shock in Q4, 2013.
In the third quarter of 2013, Samsung Electronics posted over 10 trillion won (US$9.5 billion) in operating profits for the first time in its history. However, the amount for the following quarter is forecast to be between 9 trillion and 10 trillion won, or less than nine trillion as the case may be.
The problem is that it can last at least for a while. “The operating profits are expected to continue to decline to 8.7 trillion won in the first quarter of this year,” said Hi Investment & Securities analyst Song Myeong-seop, adding, “Besides, the profits of the memory semiconductor division, which was the only arm that recorded a significant increase in profits in Q4 last year, are predicted to decline, while the downward trend continues for the display division.”