Samsung Lead Over Apple (AAPL) Depends on Emerging Technologies

Samsung (SSNLF) continues its lead over Apple (APPL) in the smartphone market but competition between the companies depends upon how and when new technologies emerge.
By Michael Sheetz ,

NEW YORK (TheStreet) -- Samsung Electronics' (SSNLF) earnings guidance for the second quarter of fiscal 2016, which were announced today, point to an increase in its lead over Apple (AAPL) - Get Report  in the smartphone market.

Samsung has been trying to play catch up with Apple, says Editor in Chief of Laptop Mag Mark Spoonauer and he thinks the competition is changing as new technologies emerge.

"For the first time in a long time the roles are reversed, especially when it comes to things like the camera [in its smartphone]," Spoonauer said on CNBC's "Closing Bell" Thursday. "I think the race is, 'what is that next big device?'"

Point-and-shoot cameras have fallen by the wayside after smartphone camera technology advancements made them redundant. To Spoonauer, smartphones are limited by these small incremental advances in technology, whereas there may be a new device that Samsung or Apple develops to give itself an advantage.

"Samsung might be pushing into foldable phones, rollup devices" while "Apple is going to continue to focus on software and services, but that might not be enough to get people excited at retail where they're making that decision," Spoonauer said.

This is "not yet" the post-smartphone era Spoonauer says, but new ideas such as Apple's development of a self-driving car or augmented reality glasses would compete with Samsung's work on wearable fitness devices and virtual reality.

Additionally, CEO of Destination Wealth Management Michael Yoshikami believes that Apple's lead over Samsung is temporary. In the same interview with CNBC, Yoshikami noted that "Apple investors are going to need to be very patient."

"I think you're going to hear the song that Samsung is defeating apple for a while. The reality is I think Apple's basically saving its powder and next year is going to be when Apple really makes a splash," Yoshikami added.

Shares of Apple are down by 0.08% to $95.86 in after hours trading on Thursday. 

Separately, TheStreet Ratings team rates Apple as a "buy" with a ratings score of B.

This is driven by some important positives, which TheStreet Ratings believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks TheStreet Ratings covers. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. TheStreet Ratings feels its strengths outweigh the fact that the company shows weak operating cash flow.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: AAPL

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