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To: slacker711 who wrote (4773)	4/13/2007 1:16:57 PM
From: Eric L	Respond to of 9255

"Samsung's Phone Puzzler" Slacker, I'm blatantly borrowing the title of Tero Kuittinen's RealMoney article of this morning for this post's header ... because it fits. As he said, and as you and I both noted ... The handset numbers were good, but not as good as they should have been. << The unit volume was good, but I didn't expect such a dramatic drop in ASP's. >> The unit volume was good, but there was no upside surprise and actually there was room for one, and many (myself and Tero included) were expecting a million or so more units. OTOH, operating margins were up a point or two above consensus estimates but some of that may have been driven by high margin HSDPA infra sold into a market where they have little competition. In addition we're seeing the old Samsung trick of charging little or no R&D and SG&A against sales in Q1 which probably accounts for relatively high margin v. low ASP. They house cleaned in Q4, as they always do, so a sequential drop in ASP of 8% was really not expected because ASP's for Q4 where already uncharacteristically low for Samsung. << Unfortunately, I didn't hear much in the Q&A to clarify the situation....was the "softness" in Western Europe a result of a lack of new models or was it market wide? Did they mark down the Ultra series in response to price cuts by others? I think I have more questions after the call than I had going into the call. >> The call went on even longer than usual and it's sort of like the analysts ran out of steam and ran off to file stories by the time Q&A moved on to Telecoms and Dr. Steel. Nobody asked about handset mix by technology as they usually do, and focused more on Samsung's strategy for emerging markets and how much NAND was in Samsung's music phones. I would have liked to heard more of Dr. Sreel. He seems pretty cool and projects well. Easier to listen to than his predecessor. They had improved mix from the Korean CDMA market (good for QUALCOMM) and that probably buoyed overall margins because Korea affords them ultra-high margins, but they noted strong competition which probably contributed to lower ASP's while holding margin back somewhat. Then there was the increase of under $100 units in the product mix (high 30's percentage wise). The big volume sellers were the D900 and E250 which probably have dropped in ASP since introduced to be competitive in the EMEA markets sweet spot where competition is fierce. The success of SYNC (and Blackjack) wasn't mentioned but I imagine Cingular squeezed the living bejesus out of them on price for those models. How soft was Europe? Certainly seasonally soft. Generally is. Moto likely to have been creamed there. Potentially Nokia and Sony Ericsson are the real beneficiaries if the bottom didn't drop out altogether. We aren't really going to be able to put the puzzle pieces together till next Friday morning since both LG and Sony Ericsson report after Nokia. Reporting other than Samsung is more condensed than its been for awhile, which in and of itself makes it difficult to put them together. Best, - Eric -

To: slacker711 who wrote (4773)	4/13/2007 11:35:59 PM
From: slacker711	Read Replies (1) \| Respond to of 9255

Hmmm, just when Samsung seems to confirm worries about global handset ASP's continuing the decline begun last year, I find this datapoint. You can only take so much from sales from two chains in the UK, but I'm still amazed that the Prada and the N95 would have any chance of topping the sales chart. mobiletoday.co.uk The LG Prada phone shoots straight to the top of the chart this week. It's the top selling handset at Phones 4u and the third best seller at The Carphone Warehouse. The N95 is the number one handset at Carphone.