Samsung Eyes Opportunity as Steve Jobs Resigns

August 29th, 2011 by Trefis Team
+7.87%
Upside
170
Market
183
Trefis
AAPL: Apple logo
AAPL
Apple

Source: Wikimedia

Samsung is nipping at Apple’s (NASDAQ:AAPL) heels in the smartphone and tablet markets while Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK) struggle to turn their businesses around and Google’s (NASDAQ:GOOG) plans with Motorola Mobility (NYSE:MMI) are not entirely clear. Apple and Samsung are neck and neck for the top two positions in the smartphone market and while Apple is still the dominant player in tablets, Samsung is fighting to close the gap. The rising competition between the two companies has led to a flurry of patent lawsuits as they jockey for position in key markets. Given Steve Jobs’ resignation announcement last week as Apple’s CEO, we believe Samsung could make a push to take advantage of this distraction.

Relevant Articles
  1. China In Focus As Apple Reports Q2 Results
  2. Down 10% This Year, Will Gen AI Tools Help Apple Stock Recover?
  3. Down 5% Over The Last Month, Will Strong iPhone Sales Help Apple Offset Mac Headwinds In Q1?
  4. After Over A 40% Rally In 2023, Will Antitrust And iPhone Issues Hurt Apple Stock?
  5. Up 45% Since The Beginning Of 2023, Where Is Apple Stock Headed?
  6. Up 34% This Year, Will Apple Stock Rally Further Following Q4 Results?

Our $510 price estimate for Apple stock is about 40% above market price.

Apple and Samsung neck and neck in smartphone market

Samsung has made good strides in the smartphone market recently. The success of Galaxy S smartphones helped it ship 17 million smartphones in Q2 2011 – a growth of 380% over the same quarter last year while Apple sold around 20 million iPhones in Q2 2011. [1]

Samsung catching up with Apple in tablet market

Apple sold around 9.25 million iPads in the last quarter and has sold around 14 million iPads in the first half of 2011. [2] However, Samsung whose market share was just under 8% in 2010 grew rapidly in 2011 and has sold an estimated 7.5 million tablets in the first half of this year, which implies that Samsung is rapidly increasing its market share in the still nascent tablet industry. [3] [4]

Steve Jobs resignation

Apple’s transformation from near collapse to industry leader has largely been credited to Steve Jobs and while we don’t believe that he has been involved in operational planning for some time, he is still a figurehead for the company and helps with overall strategy. So his removal could give Samsung renewed confidence in making a greater push for market share be it through promotional activities, additional lawsuits, marketing or new product launches. Apple in the smartphones and tablet markets.

In recent months, the two companies have been enmeshed in a series of lawsuits in Korea, the U.S. and the E.U. Samsung has also started to shore up the capabilities of Bada following Google’s (NYSE:GOOG) planned acquisition of Motorola Mobility. (see Samsung Moves to Shore Up Bada After Google-Motorola Deal). Any way you cut it, we think that competition is only getting more intense for Apple and losing Steve Jobs could serve as a major blow. See our note Apple’s Long Term Challenges without Steve Jobs.

See our complete analysis for Apple stock here

Notes:
  1. Apple Nabs the Global Smartphone Crown, Samsung Makes Gains, PCMag quoting IDC as the source, August 5th, 2011 [↩]
  2. Data available in Apple SEC filings [↩]
  3. Samsung’s 2010 tablet market share, BGR quoting ABI Research as the source, April 20th, 2011 [↩]
  4. Apple blocks Samsung’s Galaxy tablet in EU, Reuters, August 10th, 2011 [↩]