Wednesday, November 27, 2013, 02:56 pm PT (05:56 pm ET)
Apple, Inc. stock breaks $545 barrier as Samsung calls 'Crisis Awareness' meetingApple continued to climb in trading today, closing at $545.96 and reaching a market cap of $491.22 billion as its chief rival Samsung plans for "Crisis Awareness" meeting involving 600 management staff members.
Since January, Apple has bought back 47 million shares that would today have otherwise added over $25.6 billion to the company's market cap that's now increasingly closer to the $500 billion valuation the company had at the beginning of 2013.
The company is still down dramatically from stock price highs of around $700 last September, which when counting those then-outstanding shares, would have given the company a peak valuation of $658 billion.
Today, Apple has fewer outstanding shares than at anytime since 2009, meaning that the stock price would have to go up dramatically to reach last year's valuation.
Cooling competition during the winter holidays
Apple's stock collapse last year was fueled by reports depicting Samsung's Galaxy S and Note models as growing without limit, and largely seen as having the potential to eat into Apple's iPhone 5 and iPad sales. However, those predictions failed to materialize.
"As many people are foretelling that downfall of Samsung is coming, they are trying their best to prevent such crisis from happening"
Instead, Apple sold 150 million iPhones, mostly iPhone 5 models, over the fiscal year that ended in September, as well as 71 million iPads, a total of over 221 million premium smartphones and tablets.
Samsung fell far short of initial estimates that it would sell 100 million Galaxy S4 units, instead predicting an estimate of 100 million total Galaxy S and Note series phones, phablets and tablet devices through the end of the year.
Following an all day conference intended to assuage the concerns of investors and analysts earlier this month, Samsung has now scheduled a "management team gathering" to "discuss the strategies for next year."
According to a report by ZDNet Korea, "the main topic of the upcoming meeting is 'Crisis Awareness'. As many people are foretelling that downfall of Samsung is coming, they are trying their best to prevent such crisis from happening."
The company has invited 600 management staff members to attend the four day "global strategizing meeting" in mid December, leaving little room for error in devising a strategy for 2014.
Can't buy me love
Part of Samsung's plans for keeping pace with Apple have been an "aggressive marketing and promotion splurge," as noted in a report by Reuters.
Samsung is expected to spend $14 billion on ads and promotion this year, more than Google spent to acquire Motorola Mobility. That heavy spending "doesn't always bring the desired result," however, as "blatant product placement" in TV shows and film events have turned off audiences while having little impact on tarnishing Apple's image.
Samsung is expected to spend $14 billion on ads and promotion this year, more than Google spent to acquire Motorola Mobility
The report cited Oh Jung-suk, an associate professor at the business school of Seoul National University, as saying, "Samsung's marketing is too much focused on projecting an image they aspire to: being innovative and ahead of the pack.
"They are failing to efficiently bridge the gap between the aspiration and how consumers actually respond to the campaign. It's got to be more aligned."
"Samsung spends a bigger chunk of its annual revenue on advertising and promotion than any other of the world's top-20 companies by sales - 5.4 percent, according to Thomson Reuters data," the report noted. "Apple spends just 0.6 percent, and General Motors 3.5 percent."
The report also cited Horace Dediu of Asymco as stating, "the stronger, more differentiated the product, the less it needs to be propped up by advertising."
Analyst Benedict Evans added, "the underlying problem is that Samsung has established itself as a dependable quality brand, not a differentiated or premium quality product, so it does best where it's not competing directly with Apple."
On Topic: Investor
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- Apple's gross margins likely to decline this fall with new product designs, but quick rebound expected
- Shares of Apple, Inc. near ex-dividend as it gears up to distribute $2.9 billion to shareholders