Mobile Weekly Recap: Samsung’s New Phablets, Apple’s Stock Decline

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Samsung’s Note 4 Launch

Large-screen smartphones, or phablets, represen the fastest-growing segment of the global smartphone market, with shipments set triple this year. [1] Samsung Electronics (PINK:SSNLF), the company which essentially launched the phablet market, recently unveiled a pair of its flagship Note devices this week, dubbed the Galaxy Note 4 and the Galaxy Note Edge. While the Note 4 is largely an incremental upgrade to its predecessor, the Note 3, restricted to some specification bumps and software improvements, the Note Edge goes for a more radical design with an additional a curved display on the side for quick access certain apps and information. Although the devices look reasonably impressive, we don’t think they will be able to reverse Samsung’s declining smartphone market share for two reasons. Firstly, much of the growth in the phablet market could come from emerging markets, where Samsung’s smartphone business has clearly been losing momentum to local vendors –  such as Xiaomi in China and Micromax in India – who offer phones with reasonably high-end specifications at value prices. Additionally, the impending launch of Apple’s much anticipated large-screen iPhone could  take away share from the company in the premium segment.

  • We estimate the company’s FY 2014 EPS at around $170, compared to a consensus estimate of around $158 according to Reuters.

Apple Selloff Prior To Special Event Next Week

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Apple (NASDAQ:AAPL) stock tumbled by over 4% on September 3 and fell by almost 1% a day later,  after  touching an all time high (adjusted for splits) of $103.30 earlier this week. The sell off came  less than a week before the company’s special event, scheduled for September 9, where it is widely expected to launch large-screen versions of the iPhone, a  mobile payments service and possibly enter the wearable technology market with its first smartwatch. Expectations for the new products have been high, playing a role in driving up the stock price by about 24% year-to-date.  The recent sell off could be due to the fact that investors are booking a profit ahead of the new product launches, since the impact of the new iPhones – which will have to contend with a saturating high-end smartphone market – is possibly factored into the company’s stock price, while a wearable device may not offer a very meaningful upside considering the company’s already large size and market cap.

  • We estimate the company’s FY 2014 EPS at around $6.27, compared to a consensus estimate of around $6.33 according to Reuters.

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Notes:
  1. A Future Fueled by Phablets, IDC, September 2014 []