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Memo to Samsung: Improve Your Corporate Communication

By Jamal Carnette, CFA - May 27, 2015 at 8:00AM

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Being a luxury-smartphone vendor requires more than just a good unit -- you also need a strong brand.

Has Samsung sold 10 million, 20 million, or some other figure of its newest premium Galaxy line of phones? Right now, who knows? Image source: Flickr user Karlis Dambrans.

Let's just hope Samsung (NASDAQOTH: SSNLF) is better at selling smartphones than it is controlling the narrative regarding sales of its smartphones, because right now, the messaging regarding its current-gen Galaxy S6 and Galaxy S6 Edge units can best be described as a comedy of errors. The only problem is, nobody's laughing.

Initial reports appeared positive for the South Korean electronics conglomerate. Although Samsung President J.K. Shin didn't directly address preorder unit estimates, remarking only that the response to both units was positive, that didn't stop an "unnamed executive" from providing an estimate to The Korea Times: "Samsung received some 20 million preorders for the S6 and the S6 Edge ... 15 million of S6 and 5 million of the S6 Edge from mobile carriers, worldwide. That is a record."

More recently, however, a website from South Korea's Yonhap News Agency reported that Samsung itself pegged Galaxy S6 shipments at a significantly lower 10 million units, and that's including over a month of sales. The figure is also relatively disappointing in that its predecessor, the Galaxy S5, shipped 11 million phones in its first month and was widely considered an underperforming unit, in terms of sales.

Shin's silence is deafening
In attempting to correct the latest reported figures, Shin perhaps muddied the waters with his response. While firmly denying the 10 million figure, Shin provided no updated figures, nor did the executive confirm earlier preorder reports. So, officially, there appears to be no report on first-month sales to compare the newest Galaxy units to its predecessor. The lack of units shipped in the Galaxy S6's first month is even more puzzling considering Shin provided a figure last year for the Galaxy S5's units in an interview with The Wall Street Journal.

To be fair to Samsung, it shouldn't have to respond and correct all speculation regarding its operations. Apple (AAPL 0.63%) also has to contend with persistent rumors from loose-lipped Asian suppliers and speculation from sell-side analysts. Recently, the company felt the need to shoot down speculation from Piper Jaffray analyst Gene Munster and famed activist investor Carl Icahn that Apple would release a TV set. But there's a clear difference between Apple's ignoring outside speculation and Samsung's inviting it by providing conflicting reports.

A time to return to basics
For Samsung, how about a return to the basics of Corporate Communication 101? Appoint one corporate spokesperson, limit the flow of sensitive information to those who need it, and issue standardized announcements to disseminate the information. Timely and recurrent communication would help the company control the narrative better, as opposed to being controlled by it.

Take its shareholder-friendly competitor, Apple, as an example: The company releases first-weekend results for iPhone sales as a press release, and CEO Tim Cook and CFO Luca Maestri discuss iPhone quarterly sales ad nauseam during quarterly conference calls, with iPhone sales figures being the first item Cook generally discusses in his opening remarks.

Being a luxury smartphone vendor now requires more than just a good unit. It also requires an aspirational brand. Samsung needs to improve its corporate communication as soon as possible to deliver on its brand proposition.

Jamal Carnette owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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