Samsung Market Cap Drops Nearly $9B, Investors Fear Mobile Growth Slowdown

It was a bumpy start to 2014 for smartphone giant Samsung Electronics, whose market cap dropped by almost $9 billion Thursday, as investors brace themselves for what they expect to be a slowdown in Samsung's mobile device business in the fourth quarter.

Samsung's shares dropped nearly 5 percent Thursday, wiping out $8.8 billion of its market value and bringing the company's market cap down to about $182 billion.

According to a report from the Wall Street Journal, the decline was the result of investors' concerns over slowing growth within Samsung's mobile division. It represented the South Korean company's biggest one-day percentage drop in the past seven months.

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Samsung declined CRN's request for comment.

Riding the success of its Google Android-based smartphones and tablets, Samsung has emerged a market leader in the global mobile device market, managing to keep competitors including Apple and Lenovo at bay. According to the most recent data from Gartner, Samsung accounts for more than 32 percent of the global smartphone market, putting it comfortably ahead of runner-up Apple at 12 percent.

Samsung has reported a record profit six out of the past seven quarters, propelled largely by the success of its mobile device business, which grew over 23 percent year-over-year in the third quarter alone.

Investors and analysts, however, are beginning to fear that Samsung's pace may slow, particularly as competitors like Google and Motorola continue to slash prices of their smartphones, the Journal said.

Samsung partners, meanwhile, remain confident in their Samsung mobile businesses.

"We are very optimistic about our future with Samsung," said Sam Ganga, executive vice president of Commercial Solutions at DMI, a mobile enterprise solutions provider and Samsung partner based out of Bethesda, Md., in an email to CRN. "They are a global leader in manufacturing high-tech electronics and digital media and we are committed to our partnership with them to provide managed mobility services to enterprise customers for their mobile devices, smartphones and tablets."

Analysts estimate Samsung will report a fourth-quarter operating profit jump of 9.2 percent year-over-year, down sharply from the 26 percent jump it saw in the third quarter, according the Journal. Analysts also expect Samsung's mobile division to report an operating profit of 6.2 trillion won -- or roughly $5.9 billion -- up from 14 percent in the year-ago quarter, but down 8 percent from the third quarter.

Samsung is slated to announce its fourth-quarter earnings estimate Tuesday, Jan. 7.

PUBLISHED JAN. 2, 2014