Samsung Electronics Company Analysis
Statistics show that the electronics industry continues to grow. The demand for electronic appliances is fuelling the growth of the industry (Mourdoukoutas, 2018). According to a report by Zion Market Research, in 2017, the electronics market was valued at “1.172 billion in 2017 and is expected to reach $1787 billion by 2024. This is an approximate growth of 6.0% between the year 2018 and 2024. New concepts and products in the industry are associated with growth. The increasing rate of smartphone use, advanced technologies such as 4G are driving the demand for phones. The demand for specialized appliances is also fuelling the industry growth (Mourdoukoutas, 2018). Other forces behind the growth include rising demand for smart TVs, and other selected products related to connected home, and the increasing use of electronic components in various applications are also fuelling the growth.
Samsung Electronics Company has continued to outshine its competitors in the electronics industry in terms of financial position. It is ranked as the second largest tech company across the world (Stoller, 2018). In 2018, it saw a profit of $41 billion compared to a profit of $53 billion of Apple, the largest tech company. The Company continues to be the largest vendor of smartphone and mobile phone. In 2018, the company had a market share of 27% beating Apple which had a share of 24%. Samsung was the most popular smartphone brand. The company also has a great market share for flash memory in the global market (Stoller, 2018). Additionally, in 2018, the company ranked 6th globally in terms of brand value which reached US$60 billion. The statistics indicate that the company is performing well financially in the industry.
As a company, Samsung Electronics had a relatively good 2018. In the fourth quarter, the company recorded revenue of $58 billion semiconductors accounted for $17 billion while mobile communications accounted for $20 billion. The quarterly revenue was however down by 10% compared to the previous year. The operating profit also went down by 29% (Samsung, 2018). However, even with the slow performance in the final quarter, the company reported an operating profit of KRW 58.89 trillion and KRW 243.77 trillion revenue for 2018. This in addition to various technology breakthroughs solidifies the foundation for future growth. Just as Apple, its competitor, Samsung has been affected by the global economic slowdown (Samsung, 2018). The decreased demand for memory chips affecting the sales. The company hopes to secure growth in the future by increasing its sales of premium products. The market of digital appliances is expected to grow in 2019 which would help in boosting the company’s growth.
Investing with Samsung would be beneficial regardless of the performance slowdown in the last quarter of 2018. Among the key financial indicators for investing with the company include; first, high return on equity. The main aim of making an investment is getting returns. Return on equity shows the return a shareholder gets from a business and general earnings. Since ROE of 15 to 20% is considered good, it would be worth investing with Samsung since it has ROE of 19.63 (Dow Jones, 2019). Second, the electronics industry outlook is promising. The demand for electronic appliances is expected to go even high an indicator that the Company will experience increased sales even with the global economic slowdown (Mourdoukoutas, 2018). Focus on 5G, flexible smartphones, and use of artificial intelligence will ensure that Samsung meets the increasing demand for high tech appliances.
Dow Jones (2019). Samsung Electronics Co. Ltd. The Wall Street Journal. Available at https://quotes.wsj.com/SSNLF/financials
Mourdoukoutas, Panos (2018). Samsung Beats Apple in the Global Smartphone Market As Chinese Brands Close In. Forbes. Available at https://www.forbes.com/sites/panosmourdoukoutas/2018/09/13/samsung-beats-apple- in-the-global-smartphone-market
Samsung (2018). Samsung Electronics Announces Second Quarter 2018 Results. Available at https://news.samsung.com/global/samsung-electronics-announces-second-quarter- 2018-results
Stoller, Kristin (2018). The World’s Largest Tech Companies 2018: Apple, Samsung Take Top Spots Again. Forbes. Available at https://www.forbes.com/sites/kristinstoller/2018/06/06/worlds-largest-tech- companies-2018-global-2000/#155c27d44de6