Can Samsung Steal the Tablet Crown From Apple?

Investors haven't had a whole lot of confidence in Samsung (NASDAQOTH: SSNLF  ) this year, despite a string of record quarters. In response, Samsung is hosting its first analyst day in eight years to give investors a closer look at its many businesses. 

In smartphones, Samsung continues to duke it out with Apple  (NASDAQ: AAPL  ) in the high end. Samsung expects growth in the premium segment to be greater than current expectations. However, the company also said that its high-end smartphones were roughly flat sequentially, implying that most of its growth is coming from low-end units.

Samsung is also ambitiously hoping to take the tablet crown from Apple in the near future to become the No. 1 vendor, much like it is in the smartphone market. Samsung has now shared some official figures on its tablet unit shipments. It still has a ways to go if it hopes to beat Apple, but it has also gathered considerable momentum over the past couple of years. Meanwhile, Samsung still has areas where it can further integrate vertically.

In this segment of Tech Teardown, Erin Kennedy discusses Samsung's analyst day with Evan Niu, CFA, our tech and telecom bureau chief.

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  • Report this Comment On November 07, 2013, at 4:36 AM, secularinvestor wrote:

    The reason that Samsung is on a multiple of just 7 times projected earnings is that Analysts and investors are increasingly concerned at Samsung's poor performance in key mobile markets, disguised by smoke and mirror "shipment" numbers which hides poor performance in key areas.

    Apple continues to dominate high end smartphones. Samsung have admitted that the Galaxy S4 is not selling well (they admit shipments were flat last quarter). In their latest presentation they had a slide showing that they aspired to ship 100m Galaxies and Notes in 2013. That compares to iPhones actual sales of 150 m iPhones over the last 12 months. The new iPhone 5S and 5C are huge successes and Apple is likely to significantly increase its market share of high end smartphones.

    More than two thirds of Samsung's smartphones sales are in fact in the low end, where margins are razor thin.

    Similarly its tablet sales are driven by heavy discounting including many 2 for 1 offers of a free tablet with a Galaxy phone.

    Investors are alarmed at Samsung's huge and growing advertising, marketing and promotion budget of about 6% of sales or $14.2 billion for 2013. These 2 for 1 offers are financed through this massive budget, which is significantly reducing margins.

    IBD reports "Shareholder also saw that returns were at their worst during the span of five years. Investors were only getting 5.1 per cent of the profit in 2012 as compared to 15.8 per cent total shareholder returns back in 2007."

    Even with heavy discounts Samsung's tablets have failed to penetrate the vital North American market. Chitika reports that iPad's share of web usage is over 80% compared to just 5% for Samsung.

  • Report this Comment On November 07, 2013, at 5:59 AM, fauxscot wrote:

    Truth will out. Sammy can't make it on high volume no profit models any more than anyone else can. buying for $12 a dozen and selling for $1 each is not as good a lemonade stand.

    High end? If I am going to drop big bux, I'll want it to work. In this respect, Sammy has a lot farther to go than hardware design, even though they are behind in that too, now.

    PE 7 is too high.

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