SAMSUNG ELECTRONIC KRW5000 (OTC: SSNLF)
has decided to permanently end production of its Galaxy Note 7 smartphone, and the company's decision will impact members of its
supply chain and competitors.
In a research report on Tuesday, Goldman Sachs' Simona Jankowski took a look at what impact, if any, will be felt by Apple
Inc. (NASDAQ: AAPL), QUALCOMM, Inc. (NASDAQ:
QCOM) and Corning Incorporated (NYSE: GLW).
Apple: Potential Share Gains
According to Jankowski, every one million iPhone 7 Plus units sold to clients who otherwise would have bought the Note 7 would
translate to $770 million in incremental revenue for Apple and $0.03 in earnings per share.
Related Link: Galaxy
Note 7 News Has Apple Shares On Fire Again
The analyst originally estimated Samsung to sell 10 million Note 7 units prior to the battery issue was first reported. After
the battery issue was brought into the spotlight the analyst lowered her estimate to 6 million units sold.
Granted, Apple won't capture the entire 10-million-unit shortfall as it will be shared with other high-end Android competitors
and even by Samsung's other high-end device, the Galaxy S7 Edge.
Qualcomm: Modest Near-Term Negative
Jankowski noted that Qualcomm supplies components to 50 percent of all Note 7 devices. Granted, Qualcomm likely also supplies
components to devices that consumers will now pick instead of the Note 7, the company derives a higher selling price in Samsung's
flagship devices of around $60. By comparison, Qualcomm's average selling price to Apple and other Android devices is around
$20.
The analyst is now modeling a "modestly negative" revenue impact for Qualcomm of $65 million, or 1 percent of total revenue and
an earnings per share impact of ($0.01).
Corning: Negligible Impact
Finally, Corning also supplies its cover glass called Gorilla Glass 5 to the Note 7. Similar to Qualcomm, the analyst expects
most units will be recaptured by other smartphone makers but the content per device could present a risk to Corning.
However, Corning's total Glass revenue is around 8 percent of total revenue, so the impact to the company would "likely be
negligible."
Full ratings
data available on Benzinga Pro.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win
a $20 Amazon gift card!
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.