Secrecy has done wonders for Samsung Electronics. The South Korean technology giant has managed to develop a formidable lead in the smartphone market where it now sells around one handset in the three that are sold worldwide and it has accomplished this by keeping its rivals guessing. However, this summer, Samsung was forced to suffer from an unusual loss of confidence in its investors that arose partly because of the uncertainty that’s associated with the company’s strategy. Investors are questioning the company regarding its plans for the $50 billion that the company has managed to earn by selling its devices like the Note 3 and Galaxy S4 and the chips contained in them.
Samsung’s stock saw a decline from early June to mid-July and its value decreased by one-fifth. The future of the smartphone business is foremost in the mind of almost every investor because about two-thirds of the earnings of the company are generated by this area. The summer sell-off also occurred because of rising concerns that smartphones were going to be commoditized soon and would be interchangeable as well as widely available. As the differences between technology and design are becoming less visible, Samsung and its rival Apple Inc. might lose the incentive of charging a high price for their high-quality and premium smartphones, which are the major profit earners of the industry.
Though there has been a recovery in the share price of the smartphone giant, Samsung is attempting to address the lingering doubts that still exist. 350 institutional investors and analysts have been invited by the company to a Seoul hotel on Wednesday for a very rare gathering with the top management of the company. While such analyst days are routinely held by some of the top technology companies, it is the first that Samsung has done since 2005 and only the second time in its entire history.
According to an analyst, previously it was enough for the company to have rising earnings, but they have now realized that they need to be friendly with investors too. The chief executive of the company and other company officials will be taking the stage for a day and there will be presentations made on a wide array of subjects, which includes memory chips, the company’s outlook on mobile phones, its financial situation, display screen and some other products as well. The company said that it will enable investors to get a better idea of the company and help them understand the latest strategy that’s being implemented.
With two strong quarterly reports, Samsung was able to reassure its shareholders and its stock price reached its high level again. Smartphones remain very profitable for the company, but the company is also reaping the benefits from a price surge experienced by memory chips. Samsung is the biggest manufacturer of memory chips as it produces about one-third of the total global output of memory chips. Other major components of smartphones such as display screens are also made by the company. Other phone makers, on the other hand, outsource the components and assembly of their devices.