Please ensure Javascript is enabled for purposes of website accessibility

Memo to Samsung: Improve Your Corporate Communication

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$173.19 (0.63%) $1.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.