Samsung has lost nearly $12 billion in market value on Friday after investors at JPMorgan Chase cut their profit estimates for the company. The reason for the cut profit estimate: slowing sales of Samsung's premier Galaxy S4 smartphone and cheaper iterations of its flagship phone.
Those fears have caused the company's shares to slide more than six percent in South Korea on Friday. That's largely because analysts are worried the cheaper Galaxy S4 Mini or the Galaxy S4 Active will cut into the more expensive Galaxy S4's sales.
The Galaxy S4 Minis was announced last week, signaling Samsung's latest attempt to introduce its smartphones to budget-conscious emerging markets - which is widely believed to be the next area of smartphone growth - and fight off competitors offering cheaper premium wares around the world.
Samsung isn't alone when it comes to toning down its premier offerings. Apple is suspected to announce a cheaper model of its iPhone line in the coming days in order to tap emerging and middle markets. This, combined with the news of Apple's rumored iPhone trade-in program, suggests the golden age of smartphone growth could soon be over, and replaced with incremental hardware upgrades.
Such a slowdown shouldn't be too surprising. After all, about 56 percent of all American adults already own a smartphone. And while there is room for growth, it'll become much harder to sell current smartphone owners on an expensive hardware upgrade, especially when they're satisfied with their current devices.
Still, some believe the market is overreacting to analyst reports on Samsung, citing the sale of 10 million Galaxy S4s in under six weeks.
"I don't think Samsung has lost any mojo," Jack Gold, an analyst at J. Gold Associates said in an interview with Computerworld. "It is still driving the adoption of the Android ecosystem and will continue to do well. Certainly the financial markets react, overly sometimes, to any news positive or negative, but that doesn't really have that much overall effect on what people buy."
And JPMorgan Chase isn't the only investment firm concerned with Samsung's lack of innovation. Ratings agency Fitch, too believes the company is no longer producing the cutting-edge technology which leads to sales.
"Samsung has yet to prove its 'creative' innovation, that is, launching a product or a market segment that has not existed before in addition to prowess in manufacturing technology," Fitch said in a statement on Thursday, according to Reuters.
