Mark Newman, an analyst from Bernstein Research, has released a research note at the start of this week in which he has maintained his previous stance on Samsung’s stock by claiming it will ‘Outperform.’ The analyst from Bernstein Research also mentioned in the note that although the gross margin of Samsung Galaxy S IV is lower than Samsung Galaxy S III, there is not much difference when it comes to the operating margins of the two smartphones because the Galaxy S IV incorporates more homegrown components as compared to its predecessor for instance the new Exynos 5 Octa chipset in the flagship device is Samsung’s very own processor.
Newman divulged that 64 percent of the Samsung Galaxy S III’s parts came directly from the South Korean company, whereas for Samsung Galaxy S IV the manufacturer raised the bar slightly higher, as it produced 68 percent components for the device. This 4 percent increase in the usage of homegrown components signifies that more money is streaming into the bottom line of Samsung. So, four percent is more than enough to cover up the 2 percent gap between the gross margins of Galaxy S III (48 percent) and the forthcoming Galaxy S IV (46 percent). Newman has derived this calculation from the average selling $520 price of both models.
Here is a piece from the latest research note of Newman:
“We estimate that, while 53% of Galaxy S3 BOM cost was internal, 58% of Galaxy S4 BOM costs should now flow through Display/Semis (Memory & S.LSI). We estimate that, while 64% of Galaxy S3 BOM cost was within the Samsung Group (i.e. SEMCO, Samsung SDI, etc.), 68% of Galaxy S4 BOM costs should now flow through the Samsung Group. Additional profits to Samsung group entities should benefit Samsung Electronics in the form of increased equity income.”
Aside from this, Newman also indicated in his research note that Samsung is looking to producing 10 million units of Galaxy S IV for each month, which means that the OEM is making more handsets than what Bernstein had guessed. On the whole, Newman said that, “We believe the Galaxy S4 positions Samsung Electronics for continued strong earnings growth this year.”
Earlier in March, several reports have pointed out that Samsung is looking to sell 10 million units of Galaxy S IV smartphone that is almost double than the number of Galaxy S III units that the Korean company has sold. So there is a high probability that Newman’s stance on Samsung’s stock can prove true.
Source: PhoneArena, SamMobile
Photo: PhoneGain
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