Despite strong sales performance for the Galaxy S4 so far, it looks like the company, as well as some analysts expect the company to sell less units than initially believed.
A new report from Barrons reveals that Susquehanna Financial Group has recently issued a Neutral rating on Broadcom stock and a Positive rating on Qualcomm and Maxim Integrated Products stock. Why are these companies important for the Galaxy S4? Well, they all supply parts for the Galaxy S4, so a drop in handset shipments will obviously affect those companies as well, according to analyst Chris Caso. Of those companies, Maxim and Broadcom are said to miss expectations, as Galaxy S4 shipments are expected to be lowered.
The same analyst says that Samsung has been meeting investors to “temper” expectations for Galaxy S4 sales. Sales forecast for the current quarter are down to 20 million from 25 million while Q3 expectations have also been lowered down to 20 million from 30 million.
Mehdi Hosseini, an analyst from the same Group, said that Samsung is preparing for the introduction of new iPhones in the third quarter, including the rumored low-cost iPhone models. According to him, Samsung is interested in “placing greater emphasis on less-expensive models of its own,” which could replace feature phones for certain consumers..
The Q3 Samsung smartphone growth is expected to be of “low to mid single digits,” including “potentially flat GS4 units.” That won’t be enough to satisfy investor needs for companies like Maxim and Broadcom, whose businesses are tied to Samsung’s smartphone quarterly sales – Q3 sequential quarterly growth for each company is expected to be lower than during the same time last year. Here’s a full quote from Caso’s note:
Our current estimates reflect 12% Q/Q growth for MXIM’s consumer business in 3Q, the vast majority of which represents Samsung handset business. Last year, MXIM’s consumer business posted 13% Q/Q growth in 3Q when Samsung’s smartphone business was up 10% Q/Q (and the GS3 volume tripled Q/Q in 3Q). Based on expectations for low to mid single digit Q/Q Samsung smartphone growth in 3Q, and potentially flat GS4 units, our 3Q consumer estimates for MXIM may be aggressive [...] We likewise have BRCM’s mobile wireless segment modeled up 14% Q/Q in 3Q. Samsung was a 17% customer for BRCM in 2012. BRCM’s baseband revenue is likely to experience stronger growth in 3Q due to growth in the mid and low end phones, but BRCM’s WLAN business at Samsung is larger, and is likely to closely mirror Samsung’s low to mid single digit growth expectations, which we believe is below investor expectations.
The Galaxy S4 is already the fastest selling Android handset in Samsung’s and Android’s history, with over 10 million units shipped in the first month alone. Comparatively, the HTC One has sold over 5 million since launch, with the device hitting stores before the Galaxy S4. Even so, Samsung is yet to match Apple’s iPhone opening sales.
Speaking about overall sales, a different analyst says that the Galaxy S4 managed to outsell the iPhone 5 in May with three of the four main U.S. carriers including Verizon, Sprint and T-Mobile. Here’s what Mike Walkley from Canaccord Genuity wrote:
Our May U.S. wireless store surveys indicated very strong sales and improved supply in the U.S. market for Samsung’s flagship Galaxy S4 smartphone at AT&T, Sprint, T-Mobile, and Verizon. In fact, our store surveys indicated the Galaxy S4 was the top selling device at TMobile and Sprint during May and at Verizon post the launch in late May. Further, given the very strong initial sales, consumer interest, and Samsung’s marketing budget for the Samsung Galaxy S4 combined with the anticipated softer June quarter for iPhone sales, we believe Samsung surpassed Apple as the top-selling smartphone brand in the U.S. during May for the first time since the iPhone 5 launched in September 2012.
This quote seems to indicate that Galaxy S4 sales are strong in the U.S., somewhat contradicting Caso’s finings. But at the same time we’ll not that the report is based on checks with stores in the U.S. so we don’t have actual sales numbers just yet. We’re certainly looking forward to see Q2 earnings reports for the main U.S. carriers, which could reveal more details about Galaxy S4 sales.
Speaking about the Apple vs Samsung battle for market share in the U.S., we’ll also point out a recent comScore report that reveals that both companies have increased their market share in the region in the three-month period ending in April 2013.
According to the most recent numbers provided by the company, Apple is now at 39.2% share (1.4% share increase compared to January 2013), while Samsung is at 22% share (0.6% increase compared to January 2013). It will certainly be interesting to see how these numbers will change in the following comScore report considering that the Galaxy S4 only started selling in late April, and therefore it couldn’t have had an actual impact on the numbers registered for the three-month period. However, it looks like iPhone sales were unaffected by the Galaxy S4′s announcement (mid-March) and Apple’s continued to gain market share in the region despite the buzz around the Galaxy S4 and HTC One.
Recent reports have also shown that it’s just Apple and Samsung that are (still) the main companies profiting from the mobile business, with everyone else fighting for third place. In the Android ecosystem, Samsung is said to have account for 95% of profits in Q1, so it’s likely that the Galaxy S4 will bring in lots of cash to Samsung’s coffers even with lowered estimates – but we’ll end our speculation there, as we’ll wait to see Samsung’s upcoming earnings report for more details on the performance of its mobile division.
The Galaxy S3 sold more than 50 million units so far, while the Galaxy S4 was said at one point (before the handset was actually unveiled) to sell in more than 100 million units. A recent estimate said the company could sell some 80 million Galaxy S4 units this year alone.
Therefore, it will certainly be interesting to see how many Galaxy S4 units Samsung will sell in the following quarters, especially considering these new reports from analysts looking at the mobile market. That said, we’ll remind you that analysts don’t always get it right, and we’ll be waiting for official numbers to arrive from Samsung – even though the company is not mentioning handset sales in its quarterly earnings reports, the company does announce milestones for flagships like the Galaxy S4.
Have you purchased your Galaxy S4 unit yet? If not, are you going to buy one later this year?