The largest name in the iShares MSCI Emerging Markets Index
), Samsung (
), is struggling with the overall heaviness in emerging
This is a challenging call; Samsung Electronics is not as
tied to the smartphone space as Apple (
) but has been as big a beneficiary.
Samsung also makes products that have room for growth in Asia,
notably China. Samsung's ASP (selling price) is the perfect
barbell of high-end and lower-end. This is your best emerging
Having said all that, Samsung reported last night and there
are three key takeaways:
1) Guidance was conservative, if not defensive with no
real look into smartphone demand, only citing seasonal weakness
ahead. It doesn't make me feel too good after the move
Apple has had and uber expectations.
2) Competition remains intense, and Samsung could go
from hunter to hunted in the battle royale with Apple.
Samsung will become the hunted if/when Apple finally comes out
with an unsubsidized iPhone for $200 or less. Samsung rules
in China and Apple needs China Mobil (
) to get in the game to have a shot.
3) Is Samsung also moving into a "value trap"? Well, if you
believe this is same disease that Apple (and many before them
etc) is afflicted with, be careful. Valuation is very
attractive but that may be telling you something: that they can't
grow at this level. Samsung is only 11% off the crest of Jan 2 in
U.S. dollar terms.
Full disclosure: we love Samsung as a company, but we are