Emerging Markets smartphone carnage: Guess what Samsung, Apple syndrome is coming

Broker channel checks within Asia say that smartphone pricing is weakening in the second half of the year and this does not bode well for supply chain players, or for higher prices ASPs that Apple (AAPL, quote) wants to pitch. 




Image courtesy Samsung USA



But what these channel checks and just a review of the cycle should tell you that the smartphone revolution is far from the early innings.


In fact, this trade is arguably late in the game and those companies who shares have not significantly rerated lower should prepare potential impact. 


Apple’s fall from grace despite record profits is widely chronicled.  Less coverage has been on the pressure for regional Asian heavyweights in countering slowing trends.          


Last night HTC missed 2Q profit estimates on the highly promoted “One” handset, which has been disappointing for the last 2 quarters.  HTC was limit down this morning and is -80% in last 2 years, so this move is hardly surprising. 


Samsung (SSNLF, quote), however, was seemingly impervious to the devastation that had taken its rival Apple down as it had a more diversified product line to compete in Asia while still having “wow” factor. 


But after a -3.5% move lower last night and -6% over 4 sessions, Samsung is off 20% in a month. 


Technically, the stock is in trouble as it broke through the June 26 low, and all key moving average support, while registering a 26 RSI.  Last night Samsung reported estimated record profits but was still short of lofty analyst expectations. 


The reality is that the Galaxy S4 cannot match expectorations when the whole smartphone space is maturing. The 20% move lower in their share price may be just the beginning if you look at the other kids on the block.  Stay tuned.


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