The South Korean stock market has registered a drop of 4% for Samsung’s shares on Friday, even though they have predicted a record for this second quarter. There is a general concern that Samsung will have the same fate as Apple, having to deal with saturated markets, in a business where manufacturers rise and fall by their level of innovation. The company has dropped 17 percent since the beginning of June, mostly from its mobile field, which is the area that produces up to 70 percent of Samsung’s entire profit. This drop in the share market translates in $34.2 billion.
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Jung Sang-jin, who is fund manager at Dongbu Asset Management and owns Samsung shares, has stated that:
“Is Samsung’s smartphone story now over? Not quite yet. It’s growth is indeed slowing due largely to disappointing sales of the S4, yet I think Samsung has some exciting stuff up its sleeves. The problem is no one is sure whether these products can really wow investors and consumers.”
Analysts talk about a pretty wide range of factors involved in the temporary fall of Samsung. On one hand there is the last period’s big investment in marketing, rather than research and development, reaching its peek with the release of the Galaxy S4. Samsung also invested in opening brand shops in stores all over the US. On the other hand, the Chinese competitors like Huawei and ZTE Corp are safely rising producing low priced devices that are preferred mainly in China, but gradually also around the world.
How all of this works out depends on how Samsung will respond to the situation and what the company’s next move will be. We’re definitely looking forward to find out.
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