Samsung's $1B market cap ding, and a lesson in common sense

Samsung's $1B market cap ding, and a lesson in common sense

Summary: But there's no reason to panic. $1 billion to Samsung is like a dime to Bill Gates.

TOPICS: Samsung

A little financial porn to go with your morning coffee and bagel combo, served with a slice of news from the Department of Common Sense.

The Wall Street Journal reported Samsung's market cap dipped by close to 1 percent in late trading on Monday in Seoul, following the news that the company's case against Apple at the U.S. International Trade Commission failed to see older iPhones and iPads barred from import, after the Obama administration intervened at the eleventh hour.

While it's true, the company did lose about $1 billion worth of its value on the Korean stock market, it's little cause for alarm. It was a mere hiccup. 

Here is $1 billion to Samsung visualized. (I've even added a big red arrow to show how 'deep' this plunge was.)

Screen Shot 2013-08-05 at 12.35.48

It's worth remembering that Samsung Electronics, the maker of Galaxy phones and tablets, is a smaller division of Samsung Group, a conglomerate of different divisions that among other things, sells life insurance, oil tankers and occasionally build skyscrapers. Its electronics division generated about 9.53 trillion won ($8.5 billion) in profit during the second quarter, or about $51 billion in revenue. That's about one-fifth of its parent corporation's total revenue for the year earlier.

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But this is market cap, a rough estimate of the company's "price tag." Samsung's Electronics is still worth about $1,137 billion. (That's a comma, not a period, by the way.)

In effect, Samsung losing 1 percent of its price tag is a mere drop in the ocean to the vast sums it generates per year. By comparison, the company was dinged by a plunge of about $6.5 billion last month when it announced its third-quarter outlook would miss expectations on weaker Galaxy S4 smartphone sales.

Though we regularly deal with vast sums in reporting the technology industry, it is worth taking stock of what value should be associated with these figures. It is very easy to forget.

One is reminded of when hackers tweeted news of a fake bomb blast at the White House from the account of the Associated Press news agency — which of course never happened — but was enough to cause a stock market "plunge," as was described by major news organizations from The Guardian, The Huffington Post, CNBC, and even our very own CBS News

This "plunge" of the Dow Jones industrial average was too of about 1 percent, or 130 points. Granted, that was worth about $136.5 billion at the time, but again it's about context. Yes, the dip in the graph below looks significant and painful, but it's worth reminding ourselves that this is what 1 percent looks like.


In spite of the apparent panic on Wall Street, the Dow finished up just over 1 percent that day, adding far more to the economy than caused by a brief early-afternoon Twitter hack. 

Topic: Samsung

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  • $1,137 billion. No wonder Apple, Microsoft and Intel are running scared.

    Godzilla lives.
    Rabid Howler Monkey
    • Re: running scared.

      Of Samsung? You must be kidding.
    • 1,137 billion is the Euro representation of 1.137 billion US?

      I understand that , is used in place of . for decimal representations outside of America. So Samsung's market cap is 1.137 trillion?? Apples is on 435 billion?

      But Apple has 150 billion Cash on Hand; How much does Samsung have ??
      The Danger is Microsoft
  • You know you're in trouble when

    The US government has to bail you out.
  • Just shows why clowns in DC should be duct taped and deported.

    When the Odumba clown opens his mouth things go down in value.
    Just like the bush clown before him and any clown to follow.

    If the other clowns were smart they would duct tape the chief loser clown... but then again they are clowns aren't they?
    Reality Bites
  • Currency matters!

    I think there is some error in the calculations. According to Yahoo Finance ALL of Samsung is worth 166.73 T WON, i.e. when measured in the Korean currency. But using the same website the OTC version of Samsung the market cap is 157B US DOLLARS. The difference is the US dollar to Korean Won exchange rate.

    Hence Apple is almost three times the size of ALL of Samsung when measured properly
    Craig Heimark
    • You sir

      Are an idiot.
      • I may well be

        But my number are more or less correct. Apple and Exxon trade off as the largest company in the world. According to this list in wikiipedia, Samsung in not even in the top ten

        Depending upon the month Apple is 2 to 3 times the size of Samsung as measured by market capitalization (Samsung actually has higher revenues, but lower margin products)

        The point is that Apple/Exxon both have market caps around $ 450B, so the estimate of 1.137 trillion for Samsung's Electronics division is just plain wrong as that puts that division alone at almost 3 time the largest company in the world
        Craig Heimark