Saturday, June 17, 2006

The Good Ship Samsung

Korea Investment and Securities Ltd. released an analyst report, that was pretty bearish on the company. According the press reports the firm said "[Samsung's] design strategy has lost its appeal to customers.Since I do not have the report, I can only speculate if this is part of the fall out of the loss of Eric Kim. Kim was seen as one of the key brand builders before he left for Intel.  

What was really amusing in investigating this story was the research report on Korea Investment and Securities Web site. Check out these warnings, quoted directly:

"Due to the lower share price, the ongoing stock buyback should be about W1.8trn.. foreign investors tend to sell during SEC’s buybacks." 


"This time around, SEC’s stock price movement is unclear, as we believe the stock price is also affected by the economic cycle and SEC’s earnings cycle, not only by foreign investors’ sell-off." 


"We adjusted down 2Q earnings estimates, due to lower LCD and handset margins and an inventory burden." 

"The TFT-LCD division is likely to drag 2Q earnings down further...the inventory of panels for 30” TVs and IT products acts to increase expenses in June, the profit would be cut by an additional W50bn-100bn."

Sounds like some serious problems with the fundamentals. However, the at the top is this puzzling statement:

"We maintain [a] BUY [on Samsung Electronics]"

And then people wonder why I am suspicious of Korean research.


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