Who would be a handset maker?

Pity giant Samsung. It put in a slightly weaker guidance late last week and took a hammering in the market (losing $6.5 billion in market cap) for backing off an earlier estimated operating profit for Q2 of at least 10 trillion won. The revised target of 9.3 to 9.7 trillion won ($8.2-8.5 billion) was just 3-7% off the estimate, but its shares have tanked 17%.
 
Even the revised target will be a record profit for Samsung and a 44-50% increase from Q2 last year. The market obviously isn’t pleased with its profit growth “dropping” from 54% in Q1 from the year before.
 
Let’s compare that with a SingTel’s last quarterly results. The telco’s net profit dropped 32.6% and revenue was off 6.3%. Yet its share price edged up slightly in the week after its earnings were announced on May 15. Its full-year profit was down 12%.
 
The pain certainly hasn’t been spread evenly in the smartphone segment. HTC, who’s Q2 net profit plunged 83% last Friday, has seen its share price drop just 30%.
 
Many analysts think the smartphone market has peaked, with mid-range and low-end producers from China and India moving into a market segment that once was dominated by western companies. Chinese makers, including Huawei and ZTE, have seen their share of the smartphone market more than double over the last year and now account for just below 30% of the global market. That figure is likely to only increase, with prices – and margins – declining rapidly.
 
Informa Telecoms & Media predicted earlier in the year that 50% of all smartphones shipped in 2017 will be priced below $150. And that estimate may prove to be far too conservative – IDC recently reported that the average price of smartphone globally fell 8% in 2012 and is forecast to drop another 9% this year.
 
 

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.