Samsung market cap worst in 2 years

For the first time in two years, Samsung Electronics’ market capitalization dropped below 200 trillion won ($193.2 billion) as speculations that the company will have a disappointing performance in the third quarter continue to affect share prices.

As of Sept. 5, the Korean tech giant’s market cap was 198.92 trillion won, according to the Korea Exchange yesterday.

Market analysts predict that Samsung Electronics will post around 5 trillion won in operating profit in the third quarter because of its sluggish mobile phone business.

Its earnings for the second quarter, which plunged 24.6 percent year-on-year to 7.2 trillion won, also shocked the market, but an even lower expectation for the third quarter is constantly pushing prices down.

Accordingly, Samsung’s shares have fallen more than 18 percent in the past three months since June 3, while its market cap decreased 43.87 trillion won.

In the local stock market, Samsung’s market cap share also showed its lowest level since Feb. 17, 2012 - 16.22 percent on Sept. 5.

The company’s shares fell to less than 1.2 million won each early this month, reflecting the concerns.

They rebounded to 1.2 million won on Sept. 4, when the company released the Galaxy Note 4 and Galaxy Note Edge but declined again the following day.

Samsung must inevitably compete with Apple’s iPhone 6 while the high-end smartphone market is at a stalemate.

It must go also against Chinese manufacturers such as Xiaomi and Huawei, which have competitive prices in the mid- to low-end smartphone industry.

The company is seeking a breakthrough in the tablet PC and wearables market, too, but market analysts are pessimistic about this move.

“Although wearable devices and the launch of the Galaxy Note 4 and Galaxy Note Edge could slow down the profit aggravation, they seem not enough to overcome the difficulties Samsung Electronics faces,” said Park Young-joo, a market analyst at Hyundai Securities.

BY KIM JUNG-YOON [kjy@joongang.co.kr]