Samsung Hoping to Bounce Back

Jonathan Cheng and Min-Jeong Lee, Wall Street Journal:

With the release on Friday of the Galaxy S6 and its curved-edge variant, the Galaxy S6 Edge, investors will be looking for a pickup in profit margins, which crashed late last year. After 10 straight quarters with margins of 15% or more, the figure halved to 7.1% in the third quarter of 2014 before inching up in the fourth quarter.

On a conference call with investors last year, Kim Hyun-joon, a Samsung mobile senior vice president, said that the company was aiming to push mobile margins back into the “low double-digit” percentage range.

I’m interested to see how the S6 series fares over the year or so. From the reviews I’ve read — and I’ve read a lot — it seems that Samsung took a much more careful look at what they were making.

But I’ve seen a fair shake of commentary that paints Samsung’s troubles similarly to Apple’s stock price drop through 2012 and the first half of 2013. The difference is that Apple continues to deliver viable, unique products, time and time again. “Galaxy” has been the strongest brand Samsung has been able to deliver, but it’s no “Apple”, and the products are nowhere near as special. I think this is an entirely different situation, with a far less predictable outcome.1

Cheng and Lee, continued:

Many analysts think that the S6 Edge could outsell the regular S6, assuming production isn’t interrupted by any supply-chain issues. The S6 Edge uses a highly sophisticated manufacturing process to get its curved screen effect.

What analysts, where?

  1. If you didn’t think Apple would bounce back after bottoming out at sub-$400 prices, pre-split, sub-$60 prices, you were betting with trends, not your head. ↥︎