The Samsung Electronics Corp. (005930:KS) Galaxy S4 has been a hot seller so far, with the company claiming 10 million units sold on its first month of release. However, certain analysts believe that the Galaxy S4 may not sell as many units as expected, indeed an interesting point of view considering the numbers recently reported.
According to Barrons, the Susquehanna Financial Group has rated Broadcom Corp. (NASDAQ: BRCM) neutral, Qualcomm, Inc. (NASDAQ: QCOM) stock positive and Maxim Integrated Products, Inc.(NASDAQ: MXIM) positive as well. These are three of Samsung’s leading suppliers for the “flagship” Galaxy S4, so it would stand to reason that a reduction in handset shipments would lead to these companies suffering on the stock market. Analyst Christopher Caso of Susquehanna postulated that despite their ratings, Maxim and Broadcom may miss their price targets as a result of the potential reduction in Galaxy S4 shipments.
Caso also noted that Samsung has been advising investors to keep Galaxy S4 sales expectations reasonable; for the present (June ending) quarter, sales are now forecast at 20 million, down from a previous 25 million. For the September ending quarter, the 30 million sales forecast is now at 20 million as well.
Another Susquehanna analyst, Mehdi Hosseini concurred by saying that Samsung is taking the introduction of a new Apple, Inc. (NASDAQ:AAPL) “iPhone 5S” in the September quarter quite seriously, as the Cupertino, Calif. company has long been rumored to introduce a low-cost variant as well. Hosseini said Samsung might “place greater emphasis on less expensive (smartphone) models of its own” to replace so-called “feature phones” for certain demographic groups.
Despite the conservative prognosis of the two analysts, many still believe the Galaxy S4 will outsell the Galaxy S3, which has sold in excess of 50 million units since its May 2012 launch. But in the light of the recent observations, it might behoove Broadcom, Qualcomm and Maxim stockholders to sell now rather than buy, as the launch of new Apple iPhones could indeed throw a spanner in the works at Samsung’s lofty sales expectations for the coming quarters in 2013. To reiterate the point made by Caso, a reduction in Galaxy S4 shipments (and/or sales) could mean bad news for the above suppliers and their stock prices going forward.