Samsung Electronics Falls by $12 Billion in Value After Smartphone Fears

Samsung Electronics Co, Ltd. (KRX:005930) shed $12 billion in market value on Friday after several analysts cut their earnings estimates for the company amid concerns about slowing sales of its flagship Galaxy S4 smartphone.

The more than 6 percent decline in shares comes after the company recently introduced two stripped-down versions of its high-end S4 and a report that rival Apple Inc. (Nasdaq: AAPL) plans to begin a trade-in program for iPhones, Reuters said.

"With Apple widely expected to announce an older iPhone trade-in program and also a new cheaper iPhone, overall growth prospects for (Samsung's) smartphone business have dimmed," Kim Hyun-yong, an analyst at E*trade Securities, said.

In the past weeks, Samsung has introduced two new versions of its high-end smartphone, the Galaxy S4 Active and the Galaxy S4 Mini. The high-end S4 has been Samsung's fastest-selling smartphone since its release in late April.

The emergence of these more basic S4 models may help Samsung dominate the smartphone market and keep ahead of Chinese competitors, but some analysts fear that the company will be less profitable, even if it shifts more units overall, Reuters said.

Apple's plan to allow customers to trade in older iPhones for the newest model, as Bloomberg reports, also concerns Samsung investors who are afraid of eroding market share in the competitive smartphone field.

The six percent drop on Friday is Samsung’s largest share drop since August 2012, when a U.S. court ruled that Samsung infringed on Apple patents.

Samsung announced revenues of ₩52.87 trillion South Korean won ($47 billion) in the first three months of 2013, a six percent fall from the final quarter of 2012.

In a statement about its quarterly results, the company said, “As more mid-to-low-end mobile devices enter the market and new premium products are rolled out, the race for market share will intensify.

“The company will strive to remain competitive amid difficult conditions by expanding the lineup of smartphones and tablets this year.”