Ed’s Daily Notes for April 8th   11 comments

Reuters (via Yahoo Finance): Samsung Elec’s lower Q1 estimate highlights smartphone challenges

Bad news for the tech sector:

Samsung Electronics Co Ltd on Tuesday said it is on track to post its second straight quarter of profit decline, as slowing smartphone sales growth continued to weigh on earnings.

The South Korean tech giant estimated that its January-March operating profit fell by 4.3 percent to 8.4 trillion won, slightly below an average forecast of 8.5 trillion won by 40 analysts polled by Thomson Reuters I/B/E/S.

The world’s biggest smartphone maker is counting on the fifth version of its flagship Galaxy S smartphone, which goes on sale globally from Friday, to right the ship and prove the firm’s staying power as a mobile innovator.

But the Galaxy S5 has already got off to a weak start at home, with its South Korean debut marred by a temporary ban on mobile carriers selling handsets and criticism that it lacks eye-catching new features.

Underscoring the challenges, Samsung priced the S5 about 10 percent cheaper than the S4 even though main rival Apple Inc (APPL.O) is not widely expected to update its line-up until September. It also dialed back on marketing glitz to keep margins stable.

Analysts said the company’s efforts to rein in component costs and make products that appeal to a wider audience will be crucial as Samsung braces for what could be its first annual profit decline in three years.

Whether this is being caused by the world economy slumping, or if it is because the smartphone manufacturers have already milked the high-end market for all it’s worth, neither is a good sign for the tech sector. However, if it is the second part, at least smartphone manufacturers can grow by building low-end models. If it is the world economy slumping, that will show up across all sectors. Alcoa (AA) might give us a clue when they report earnings later today.

Wall Street Journal: Microsoft: We’re in an ‘AI Spring’

Microsoft’s secret weapons to get back to the top of the tech mountain: machine learning and artificial intelligence, some of the company’s top R&D brains said Monday.

Harry Shum, head of technology and research at Microsoft, said the big trends that his team is working on involves how a person interacts with a computer. “We are now moving from the personal computer to personal computing,” he said at Microsoft’s Think Next 2014 conference in Tel Aviv.

Microsoft is investing heavily in “invisible user interface” technology, said Yoram Yaakobi, who heads up Microsoft’s research and development center in Israel. Yaakobi said people in the future won’t need to touch, type or speak to their devices — the devices will “know” what we want them to do before we ask. He called it “UI.Next.”

“User interface started with the command prompt, moved to graphics, then touch, and then gestures,” Yaakobi said. “It’s now moving to invisible UI, where there is nothing to operate. The tech around you understands you and what you want to do” — and that’s what people expect, he said. “We’re putting this at the forefront of our efforts.”

It’s about time Microsoft recognized this! But I am still optimistic on Mister Softee, even if they are a little late to the game.

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Posted April 8, 2014 by edmcgon in Earnings Season, News, Stocks, Technology

11 responses to “Ed’s Daily Notes for April 8th

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  1. For those who traded and may still own

    James River Coal files for Chapter 11 bankruptcy

    http://www.marketwatch.com/story/james-river-coal-files-for-chapter-11-bankruptcy-2014-04-07-18485718?dist=beforebell

  2. Ed, thanks for the walk down memory lane during those heady days of NUGT and JRCC. I don’t trade stocks or options but I do enjoy reading about everyone else’s trades.

    • Zosa,
      Now you have me curious. You don’t trade stocks? I thought you did?

      • I buy (mainly dividend) stocks for our taxable account and I usually hold them for a very long time. All of our tax deferred savings are in mutual funds. We still own the first fund I purchased for our IRAs in 1985.

      • Nice! Dividend stocks are a good (and safe) way to play the markets!

        I’m not a fan of mutual funds.

      • I know you’re not a fan and that’s why I’ve never bothered to post about that topic. However, most 401K plans are populated with mutual funds only and investing at regular pay periods takes the drama away from the ups and downs of the market. Index funds are a very cheap way to capture large segments of different markets (domestic stocks and bonds, foreign stocks and bonds, REITs, etc.). I have also invested in funds run by experienced long-tenured managers that have low expense ratios and excellent returns. The dividends in these funds compound just like stock dividends do.

        I’ve been an investor in the stock market for about 30 years and have done quite well by not timing the market and investing in it on a regular basis. Buy and hold does work if you stick with it.

      • True enough!

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