Samsung Electronics on Friday missed is already modest guidance for quarterly earnings, deepening concerns that the electronics giant’s smartphone business might already have peaked.
Sales growth in its flagship Galaxy phone line has started to wane and more rivals are emerging to chip away at the handset market share.
The Galaxy S, which is powered by Android, the free Google platform, propelled Samsung into first place for makers of smartphones in 2012. The South Korea based Samsung overtook Apple, whose iPhone set the standard in the industry five years ago.
However, investors now fear that Samsung might also follow in Apple’s footsteps and those of other once top players that have struggled with shrinking margins, in the current industry where businesses live and die by staying ahead of the innovation curve.
The growth of the smartphone by Samsung is slowing due in large part to the disappointing sales of its latest handset the S4.
The earnings estimate was disappointing by Samsung, which had a proven track record of beating forecasts that were very bullish. The announcement sent stock prices for Samsung down over 3% Friday.
Since early in June, the stock price for Samsung has fallen by 17%. The price of the stock reflects the concerns about the handset margins at Samsung, as its mobile business has generated more than 70% of the overall profit at the tech giant.
The drop in price of stock since the beginning of June represents a drop in market value of over $34.2 billion, which is worth the capitalization of LG Electronics and Sony Corp combined.