Uber, Samsung & Huawei – Q2 19 update

Uber has lost its soul

• The news of layoffs at Uber comes at a difficult time for the company which is now hostage to the whims of the fickle stock market.
• About 400 employees are to go from its marketing department in a sign that its Q2 18 results on the 8^th August are not going to be pretty.
• Long gone are the days when Uber was aggressively moving to dominate the ride-hailing market and was sweeping all before it.
• Instead, management crisis and indecision in 2017 led to it leaving the door open for Lyft to re-establish itself as a viable competitor.
• The result is a fight to the death for the US market between Lyft and Uber where only one of them will be able to make a good return.
• Lyft has also made the mistake of going public (see here) but with Google as a backer, it will have the resources to slug it out with Uber.
• Uber’s current management shows none of the grit and determination that originally put it into a dominant position but then again, it also will not repeat the mistakes that got it into trouble.
• Uber still has the advantage in terms of size, but I think Lyft’s management is better tuned to the reality of what it is trying to achieve.
• Long Lyft and short Uber would be the position I would take.

Samsung vs. Huawei: No shift yet.

• Both Samsung and Huawei’s H1 2019 as well as Counterpoint Research’s Q2 19 data shows that the secular shift I have been looking for has yet to occur.
• Data from mobile operators indicates that outside of China, orders for Huawei products are falling fast but surprisingly this has yet to show up in Huawei’s shipment numbers.
• Counterpoint data indicates that in Q2 19 Huawei shipped 56.7m units and increased its global share from 14.9% in Q1 19 to 15.8% in Q2 19.
• I had been expecting a much lower figure (see here) but it appears that no longer being able to ship new devices with Google Ecosystem has yet to have an impact on demand for Huawei.
• The ban is not retrospective so only new devices launched by Huawei are affected.
• Hence, existing products can still ship with the Google ecosystem and demand for these has not declined as operator data indicated.
• This has the impact of delaying the drop but this cannot last for much longer as rivals continue to release new products.
• This also showed up in Samsung’s Q2 19 figures where it did not see the gain in share that I had been expecting.
• Despite the delay, it remains clear that users will not be purchasing Huawei phones which do not feature the Google ecosystem and so the opportunity for Samsung and others is still there for H2 2019.
• I expect Xiaomi will also have a big push to take up this share but with its greater scale, logistics and distribution it remains in the best position to take up the majority of the share Huawei relinquishes.
• Consequently, I am happy to remain long Samsung Electronics.