A new report out this morning hits the nail on the head by stating that "Analysts fell under Samsung Electronics Co Ltd.'s marketing spell when they made what they now admit were hopelessly optimistic forecasts for its smartphone sales."

Wall Street's Massive Wave of Samsung Downgrades

The report continues by stating that "A massive wave of downgrades has since followed, with forecasters including JPMorgan, Morgan Stanley and Goldman Sachs taking a harder look at their assumptions of how well the S4, Samsung's latest Galaxy smartphone, would actually do."

Sales estimates for the S4 were slashed by as much as 30 percent, stirring investor concerns over Samsung's mobile devices division - the company's biggest profit generator.

Investors in the South Korean IT giant have paid dearly. Samsung lost nearly $20 billion in market value in a week as shares plunged following the downgrades.

Byun Hanjoon, an analyst at KB Investment & Securities stated that "most forecasters including myself had this conviction that they'll outperform again - because it's Samsung. They had beaten expectations before, which led many to believe they were bound to excel again with the S4."

Hanjoon added that that "Expectations for innovation have been lowered, and I don't think there'll be as much buzz surrounding new product launches as it used to be."

This line of thinking about Samsung had first surfaced in our report covering comments that came from Fitch Ratings earlier this month. Fitch's report on Samsung boldly stated that Samsung had yet to prove its "creative" innovation which was defined as creating a new product or market segment that hasn't existed before. Translation: Samsung's leadership is still based on copycatting other company's true innovations. Other major Wall Street brokerage firms now concur.

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