SM Strikes into Earning Shock leading to fall – Analysts in panic

SM Strikes into Earning Shock leading to fall – Analysts in panic

Nov 14, 2012

SM Entertainment (CODE 041510) showed earning shock [economic performance shows a lot lower than expectation]. Its business profits in this third-quarter were below analysts’ estimated profit – which were less than half of estimated figure.

SM submitted its report of this quarter to the Financial Supervisory Service at 14:12 without any public announcement. According to the report, its business profits for third-quarter was 11.7 billion KRW. It was more than the last third-quarter, but a lot less than expectation of stock market. Analysts had estimated its third-quarter’s business profits to be 20~23 billion KRW.

The stock price responded immediately. It started to falling slowly right after its report, and hit the floor of the lower limit at 14:25.

[irrelevant part omitted]

Analysts at stock firms are in a state of confusion and it is known that a shower of enquiries and complaints are coming from institution investors. “We haven’t even seen the official report yet, but everyone is in panic as there are telephone calls without a break. We are not able to find out exactly why SM had such Earning Shock at the moment”, appealed a [anonymous] analyst at a firm.

It has been known that SM explained about the reason of this Earning Shock is because of a big production cost of TVXQ and Super Junior’s Arena Concerts. However, general experts insist that SM’s explanation cannot be an underlying reason. “There might have been some [serious] problems in the company because it is just too lower than expected” – commented another analyst.

SM insisted that TVXQ and Super Junior’s concerts were the reason of its bad economic performance, but it used to be considered as one of the most favourable factor of SM as most analysts estimated that “Its profits of the 3rd quarter will be  drastically increased because the results of the Arena Tour will be reflected in 3rd-quarter, not 2nd-quarter”, because about 1 million people were expected to come to the concerts in Japan in this half-year.

Due to SM’s Earning Shock, other entertainment stocks turned into a sharp fall. YG Entertainment decreased by 13.86%, JYP Entertainment, PAN Entertainment and Chorokbaem followed by 4~8%.


SK Stock Firm added, “The reason of its sharp fall is caused from a lot of difference between the market’s estimation and actual business performance. The problem was that the production cost of TVQX concerts which were known to attract half a million people became too high”.

“A company like SM, its estimated profit tends to be entirely depends on what the company says. How are we supposed to believe it in the future, after announcing less than half the business profits of the market’s expectation?”, commented a analyst at another firm.



-Minus 14.88% in a day, after earning shock-

– Entertainment stocks are more like ‘a house of cards’ in Korea, because so-called ‘K-POP invasion’ is actually inessential figure if you know how SM tried to exaggerate it by using media,  to make it as if  they conquered the world. (Think abt who is really conquering the world as a Korean singer at this moment! :P)

– Korean entertainments’ overstated media-fuss is directly related to their stock prices. They have to keep the price as much as they can, whatever it takes, with every possible way because only media-fuss can make people deluded by slick marketing.

– Therefore, it always could decrease drastically as soon as any reality is revealed. (well, which I welcome the most)

– Also it could reflect that there is no enough cash-flow at SM, based on the situation  that SM risks its neck to its stocks. (Actually SM is just lying in the court, insisting that it did nothing bad so cannot give a penny to JYJ for the compensation for damages from the lawsuit to clarify invalidity of its exclusive contract. -the compensation was set 3 billion KRW-. )

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12 thoughts on “SM Strikes into Earning Shock leading to fall – Analysts in panic

    • It’s my choice what is related or not – and this clearly somehow related. This overstated stock price also explains why SM is just lying in the court for over 3 years, insisting they cannot give a penny to JYJ. If SM loses (obviously the result is already out anyway), it will directly effect its stock price which should be hugely damaged. Especially for a company like SM which entirely relies on media-reputation, not actual solid financial standing, losing the biggest lawsuit in company’s history means a lot. Therefore, the current situation will certainly help you to understand general things in broad view. – because this is one of the reasons why SM risks its neck to block JYJ and other companies collude with it.

  1. 핑백: [TRANS] 121114 SM Strikes into Earning Shock leading to fall – Analysts in panic « JYJ3

  2. tsk tsk tsk. Hey, gang – remember the good old days when TVXQ used to actually make money for the company? So putting on all of these “Look How Big And Successful We Are!” extravaganzas is actually bleeding the company dry – what a shock. (not.) OK, OK, enough gloating. Here’s what I think: bottom line, you can’t believe a word SM says, ever. They will LIE until their last day in business. So any news like this about them… who knows what the truth really is? They are through and through dishonest. The sooner investors take this into consideration when investing their money in this house of cards the better.

  3. 핑백: [TRANS] 121114 SM Strikes into Earning Shock leading to fall – Analysts in panic « iMickyCassie

  4. 핑백: 15Nov2012 [TRANS]SM Strikes into Earning Shock leading to fall – Analysts in panic « PaRK YooCHUN SGFC

  5. 핑백: (TRANS) 121114 SM với Cú shock doanh thu – Các nhà phân tích cực kỳ bối rối | Spread JYJ's Love

  6. 핑백: [TRAD] 121114 Huelgas de SM – Shock en las ganancias que conducen a una caída – Los analistas en paníco « jyjtres


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