Samsung’s new phones seen as no remedy for $60 billion stock slump

Bloomberg

Samsung Electronics Co.’s latest flagship smartphone isn’t the antidote to a stock slump that’s wiped more than $60 billion from the technology giant’s market value since November.
That’s the thinking of investors like Sat Duhra, who helps manage
$371 billion at Janus Henderson Investors. His fund has reduced holdings of Samsung and its South Korean industry peers amid concern over cooling chip prices and lackluster global smartphone demand. Morgan Stanley is among brokerages taking a similar position, reaffirming that it’s still neutral on the stock after cutting its rating
in November.
Shares of the world’s largest smartphone and memory-chip maker have fallen 18 percent from a record high on November 1 as investors expressed rare skepticism about the South Korean firm. Samsung unveiled the Galaxy S9 at Mobile World Congress in Barcelona, banking on new features such as augmented-reality based emojis, camera upgrades and stereo speakers to take on Apple Inc.’s iPhone X. But Duhra is underwhelmed.
“There’s actually not that big of a step up in these phones versus the last model,” Duhra said.
“Mobile handsets will be steady but nothing exciting,” he said, while noting that he expects earnings from the chip business to slow.
Duhra says he doesn’t see Asian technology hardware makers generating as much profit as they did last year. He’s been buying financial stocks at the expense of some of those companies, he said. While he declined to comment on individual stocks, citing company policy, Samsung’s weighting in his Asia Dividend Income Fund slipped to 4.9 percent as of the end of January compared with 5.4 percent December 2017. As brokerages either slashed their ratings or earnings outlooks for Samsung, the proportion of hold ratings on the company has risen close to 10 percent, according to data compiled by Bloomberg. That’s the highest since January 2017, when the company was recovering from its batteries exploding in its Galaxy Note 7 phablet smartphones.
Global shipments of smartphones rose 2.7 percent to 1.54 billion units in 2017 compared with a year earlier, according to Gartner. That’s the slowest pace of growth since the research firm started compiling data around 2011. Still, Samsung bulls far outnumber bears.