How quickly the markets turn against their darlings ‘ both Apple and Samsung continued to labor amidst reports of slowing sales for their flagship devices this week.
Samsung was said to be preparing to retire the Galaxy S3 earlier than planned, while cutting Galaxy S4 production. Korean media said monthly output levels of the S4 could be reduced by 10% to 15%. ET News said the vendor had procured parts for over 10m handsets in each of April and May, but would be down to 6.5m for July.
Recently, analysts at JP Morgan reduced share price estimates by 9.5%, sending Samsung shares into a downward spiral, citing fears of a slowdown in S4 sales. The firm said poor European consumer demand was the main factor, and slashed its full-year predictions for S4 shipments by 20% to 30%. While CEO Jongkyun Shin denied any problems, analysts say that, if the S4 cannot increase Samsung’s market share on its own, the firm will launch additional new models to make up the shortfall and hit its overall targets. The Galaxy Note III, Galaxy S4 Mini and Galaxy S4 Zoom are among the models tipped to take on this task.
Meanwhile, Apple’s share price fell below $400 again amid fears that the iPhone 5 has been a slower seller than its predecessors. Indeed, the company’s market valuation fell below Google’s, said The Wall Street Journal, if net cash is taken out of the equation (Apple had $145bn as of March, and Google $45bn). Without those nest eggs, there is an enterprise value of $233bn for Apple, and $241bn for Google.
Like Samsung, Apple has been under pressure in western Europe, and it also has issues in India, though the iPhone’s Chinese share has been growing steadily. According to IDC research, Apple’s mobile phone market share in western Europe fell to 20% in the first quarter, from 25% in the year-ago quarter, while Android was up from 55% to 69%. Despite the reports that Samsung has not hit its sales expectations in Europe, in Q113 it boosted its market share to a massive 45%, up from 39% in Q112. Sony and LG also gained share in a sector that is increasingly concentrated in the hands of a few suppliers.
And worldwide, the iPhone 5 is not making the same impact as its forerunners, according to a research note from Oppenheimer analyst Ittai Kidron. He cited retail checks that indicate “steady demand for the iPhone 4/4S and mixed demand for the iPhone 5’ ‘ he now expects iPhone sales of 26m for the current quarter, down from his prior forecast of 27m.
Analysts at another firm, Jefferies, added to the pain by lowering their target price on Apple, citing a glut of unsold iPhones. Retailers and carriers have twice the normal levels of iPhone inventory, indicating that Apple is selling fewer handsets than expected, said analyst Peter Misek.