Samsung Falls to 2-Year Low as Profit Estimates Lowered

Samsung Electronics Co. slumped to its lowest level since 2012 in Seoul trading after Apple Inc. sold 10 million new iPhones and analysts lowered profit estimates for the world’s biggest maker of smartphones.

Samsung declined 2.3 percent to 1,161,000 won, its lowest price since July 2012. The company that ships one of every four smartphones in the world has plunged 15 percent this year, wiping about $30 billion from its market value.

Samsung was overtaken by smaller rivals in China and India during the second quarter, and then Apple said yesterday it sold a record number of the iPhone 6 and iPhone 6 Plus during their debut weekend, helping the U.S. company narrow Samsung’s lead in selling bigger-screen smartphones. Analysts have cut their estimates for Samsung’s third-quarter operating profit by 12 percent in the past four weeks to 6.50 trillion won ($6.2 billion), according to data compiled by Bloomberg.

“Its smartphones have lost appeal -- as evidenced by the solid performances of high-end Chinese models and unexpectedly strong iPhone 6 pre-orders,” Samsung Securities Co. said yesterday in a report reducing its profit estimate to 4.7 trillion won from 5.7 trillion won. Hyundai Securities Co. estimates Samsung’s third-quarter operating profit at 4.2 trillion won as the company continues spending on marketing to defend market share, according to a report released yesterday.

Xiaomi, Lenovo

The consensus for 6.50 trillion won in operating profit is based on the average of 36 analyst estimates compiled by Bloomberg.

Samsung, based in Suwon, South Korea, posted an operating profit of 7.19 trillion won in the second quarter, the smallest in two years. The maker of Galaxy devices is grappling with market saturation, a reduction in the subsidies for devices by Chinese carriers and gains made by Chinese producers including Xiaomi Corp. and Lenovo Group Ltd. that offer feature-packed phones at cheaper prices.

China’s State-owned Assets Supervision and Administration Commission told the three state-owned carriers in July to start cutting promotional spending by a combined 40 billion yuan ($6.5 billion) over three years, people familiar with the matter said in July.

Samsung declined to comment today on the impact of those reductions on its business in China. The company unveiled a pair of bigger-sized Galaxy Note smartphones earlier this month, including one with a display extending down the side.