Looks like Samsung’s new flagship smartphone, the Galaxy S4, has failed to hit the bulls eye unlike its best-selling predecessor. According to a Reuters report, poor sales of Samsung’s Galaxy S4 smartphone has caused the Korean tech giant to lose $12 billion in market value. The company saw its shares slide over 6%, following the introduction of 2 stripped-down versions of the S4.
The report details that the company is hit by brokerage downgrades following market concerns that profit margins for its mobile business will suffer. The analysts say that sales momentum for the high-end version of S4 has slowed down due to the the 2 low-end versions of the handset recently introduced by the company. The shares of the Korean company dipped even further following reports of Apple to soon begin a trade-in program for iPhones, a program intended to make upgrading to the latest model easier than ever.
Sales of high-end handsets are lagging behind expectations, while low- to mid-end handsets are selling briskly worldwide,” said Kim Young-chan, an analyst at Shinhan Investment Corp.
“As the portion of low- to mid-range handsets is expected to increase in Samsung’s overall mobile phone business, this has also sparked concerns about thinning margins and lower growth.”
“With Apple widely expected to announce an older iPhone trade-in program and also a new cheaper iPhone, overall growth prospects for (Samsung’s) smartphone business have dimmed,” said Kim Hyun-yong, an analyst at E*trade Securities.
Samsung’s shares finished down 6.2% at their lowest level in 4 months, wiping out $12 billion of value to bring its market cap to $188 billion.