Samsung's shares fall amid concern on Q4 results

Samsung Electronics' shares fell today amid concern among investors about the possibility of weaker-than-expected fourth-quarter results and declining profits in its flagship mobile division.

Samsung's stock closed down 4.6 percent on Thursday in trading in Seoul, which wiped out 9.3 trillion won, or $8.8 billion, in market value, according to the Wall Street Journal. Samsung's market value stood at $192.1 billion on Dec. 20, the last day of trading in 2013, according to the Journal. At one point in trading, the stock was down as much as 5.1 percent, the lowest since late August, according to Reuters.

Analysts also said concerns about a stronger South Korean won affecting the overseas competitiveness of Samsung's products as well as weaker margins at Samsung's display business were factors in the decline. Samsung is expected to release its fourth-quarter earnings estimate next Tuesday.

According to the Journal, analysts expect Samsung's mobile division to show an operating profit of $5.9 billion for the fourth quarter--which would be up 14 percent year-over-year but down 8 percent from the third quarter. Samsung's official results and sales are expected at the end of January.

"The proportion of less premium smartphones appears to have increased within the portfolio, squeezing margins," Doh Hyun-woo, an analyst at Mirae Asset Securities, told the Journal. Like Apple (NASDAQ:AAPL), Samsung has carved out a niche at the high end of the smartphone market, and could be susceptible to shocks if more carriers move away from device subsidies and toward device financing. However, Samsung has a broader smartphone portfolio than Apple, which could cushion the blow, but might mean a shift toward lower-end devices, which could crimp profits and margins.

Meanwhile, Samsung Chairman Lee Kun Hee told workers at the company to think in new and innovative ways and move beyond their focus on hardware. "We have to change once again," Lee said, according to emailed notes from the company sent to Bloomberg. "We must give a bigger push for innovations, including in business structure, so that we can lead industry trends." Samsung should create new businesses by bringing together technologies from different industries, Lee said.

"Our leading businesses are constantly being chased by competitors, while time is running out for our less-competitive businesses," Lee said. "Last year, we engaged in do-or-die battles with companies around the world and endured patent wars in light of market slowdown and prolonged, weak global economic growth."

For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article

Related Articles:
ABI: Samsung ranked as top enterprise smartphone vendor
Samsung merges mobile and camera units to differentiate its smartphone imaging
Samsung bullish on high-end, LTE Advanced smartphones, but puts focus on software
Samsung posts another record profit in Q3, but warns of tough smartphone competition