Is Samsung’s Profit Decline a Warning for 2014?

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Jan. 7 (Bloomberg) -- Mark Newman, senior research analyst at Sanford C. Bernstein, examines the fourth-quarter profit drop for Samsung on Bloomberg Television’s “Bloomberg Surveillance.”

Part of the market.

How long can that last?

I don't see any reason why that should last because if you look at the editors on the low end, it is all the chinese any fractures -- manufacturers.

The scale is genetically smaller.

Samsung market share is about 33%. these guys are around 4% each, so about 10 times in terms of unit.

Their cost structure is significantly lower.

It is all getting brand premium on the low end.

They have a defense -- decent margin.

One of the great distinctions i see is the operating income line, samsung does about $.14 on the dollar.

Apple does about $.28 on the dollar.

Please, explain to me why i to own samsung versus owning apple.

The main reason is that you wish and.

Samsung trading about six times earnings.

Take out the cash, about four times earnings.

It is extremely cheap if you compare to apple or pretty much any other tech stock.

Another thing i want to add, or the introductory comments, what is very misleading is quarter on quarter, if you talk about samsung profit falling and may be losing shares to apple in q4 versus q3 may be correct, but let's look at the product cycle.

Samsung's biggest product cycle was in q2 and q3. you need to look at the year.

On the year, 2013, profit was up significantly more than 30% and gain share on apple 2013 versus 2012. let's stick to that product cycle question.

I'm looking at operating profits and consumer electronics will stop we assume the company's chairman call for -- we have seen the company's chairman call for innovation.

Where is the bright spot for samsung, and the software they're developing and rolling out?

You know, i think the main bright spot right now we see is memory semiconductors.

I cover that globally.

Memory-chip prices are very, very strong, especially -- nanflash is also big market.

Samsung is the global leader.

If you look at the micron stock, the plaster.

-- up last year.

I think memory is driving the majority of samsung's operating profit growth next year.

That is an exciting area.

You are in asia.

What about the big dog in the market, which is china and the battle there between samsung and apple?

In china, on the smartphone side, samsung is way ahead there.

They have over 20% market share in china.

Apple is significantly behind there.

And the main reason is because the diversification of products they have, they always lee still not just high-end like apple, but also mid, low end, low price point phones so they can serve a much redder portion of the population.

-- a much greater portion of the population.

The main competitors in china are the local chinese such as lenovo, etc.

Thank you, mark, we appreciate you talking to us on samsung.

That's bring in our guest host for the hour, allen adamson.

You are an expert on branding.

What does samson need to do in terms of its brand.

It doesn't have the innovative mantra that apple has.

It is struggling.

The wall street journal is to

This text has been automatically generated. It may not be 100% accurate.

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