"I'm a little concerned about a hint that some of the strength in the wireless sector might be associated with preholiday inventory build."
A couple of the analysts' questions dealt with this in the CC. Management response was that they didn't see it...possibly because they are gaining market share. The conference call is still available and SWKS will also present at a Prudential conference tomorrow (see SWKS IR page for details).
Did you see the release below from SWKS #1 customer (Samsung )? At today's close SWKS is still a steal at a P/S of about 1.1 on what I expect next year's revenue to be (~$700M)! Compared to QCOM (9.8), RFMD (3.0) and TQNT (2.5) I believe SWKS is the best value in the entire wireless area. Another thing I like about them (vs QCOM) is that they should win no matter what happens with the GSM/GPRS vs CDMA battles.
Samsung says winning U.S. market for pricey phones
biz.yahoo.com
Tuesday October 29, 4:53 pm ET
By Eric Auchard
NEW YORK, Oct 29 (Reuters) - Samsung Electronics Co. (KSE:05930.KS - News), the world's No. 3 maker of mobile telephones, is capturing the bulk of the U.S. market for pricier phones and is poised to gain further share, officials said on Thursday.
"When you get in the higher price point products at $150 and above, we are about 45 percent of the market," Randy Smith, Samsung's vice president of U.S. wireless product marketing, told analysts and reporters at an annual strategy briefing.
He was referring to a recent study of the U.S. mobile phone market by market research firm J.D. Power and Associates that showed Samsung topped arch-rivals Nokia and Motorola in customer satisfaction, product design and high-price buyers.
"We are getting a disproportionate share of the 'upgraders' who want more features in their next phone," Peter Skarzynski, senior vice president of U.S. mobile phone sales for Korea's biggest electronics maker, said at the briefing here.
Samsung is confident about its position in the U.S. market as it enters the end-of-year holiday selling-season because replacement sales of phones to carriers and major electronics retailers remain strong, with wholesale orders still streaming in. While the final verdict won't be delivered until after Thanksgiving, officials see all signs pointing positive.
"Our sell-through to customers is going very well," Skarzynski said in an interview at the sidelines of the analyst briefing. "Even at this late stage, we continue to receive orders because of great sell-through in all of our products."
Samsung has captured the early lead in the U.S. market for the most advanced new phones, which offer not only voice, but new text and e-mail handling features, bright color screens, and built-in camera features. Soon it promises to offer even a wristwatch-style mobile phone.
Citing industry research data, Skarzynski said its share of U.S. phone sales based on CDMA technology is in the low 20-percent range. Its U.S. share of GSM phones, a market it entered only last year, is in the high-teens as a percentage, or about one-sixth of the market.
VULNERABLE IF MARKET RESISTS HIGH-PRICED WARES
But Samsung's very strength also makes it vulnerable, as the overwhelming percentage of U.S. consumers have come to expect new phones to be supplied for less than $100, or even free, said John Jackson, mobile analyst with Yankee Group, an independent market research firm that is a unit of Reuters.
Samsung is riding the wave of a market in which 28 percent of U.S. mobile phones, or 41 million phones, are estimated to be two years or older. Customers will either upgrade in the next 18 to 22 months or their phones will break, according to industry data.
Samsung's richer mix of high-priced phones exposes it to the danger of unsold inventory unless consumers now begin to demand little-understood features like music ring tones, picture-swapping via camera phones, even text-messaging.
That strategy remains perilous in a market where over the last year -- thanks to subsidies from U.S. mobile operators desperate to capture new subscribers -- fully one-third of Americans paid nothing for a new phone and 85 percent paid less than $100, according to Yankee Group data.
Skarzynski said Samsung's worldwide plan was to add 10 million units of phone production capacity in 2003, up from the more than 40 million mobile units it expects to build in 2002.
This suggests Samsung will continue to gain market share as the ranks of global mobile phone suppliers dwindle to three major players -- Nokia, Motorola and Samsung -- even as the market grows to between 420 million and 430 million new handsets in 2003 from 2002 sales forecasts of just over 400 million.
Company officials declined to make specific predictions.
Building on its manufacturing prowess and dominance in Korea, which has emerged in the past two years as the world's most advanced mobile market, Samsung has doubled its percentage share to become No. 3 in the world in 2002 with a 10 percent share, up from No. 6 in 2000.
The company is betting that the success Samsung has seen in Korea's advanced mobile market will play out in the United States and globally.
Samsung's strategy is to build on its close ties with a handful of major U.S. carriers and extend them to become the preferred supplier of high-end phones across all major carriers, including AT&T Wireless, where it currently has no contracts, but hopes to win some in the coming year.
Skarzynski pointed to recent wins at carriers such as T-Mobile (XETRA:DTEGn.DE - News), the No. 6 U.S. supplier of mobile services, and Cingular, the joint venture of BellSouth (NYSE:BLS - News) and SBC (NYSE:SBC - News) that is No. 2 in the U.S. mobile service market.
These companies are turning to Samsung for feature-rich phones that draw customers who spend far more on their monthly bills, Samsung officials say. To this end, T-Mobile has in the 13 months since it began selling Samsung phones jumped to become one of Samsung's top five customers worldwide, he said. |
