Company vows to discern cause of Note 7 blunder to the end and open the result
By Yoon Sung-won
Samsung heir Lee Jae-yong has come to the fore at the top Korean electronics company.
Samsung Electronics said Thursday that the appointment of Lee as a member of the board of directors was approved by shareholders at an extraordinary meeting in Seoul.
Expectations are that Vice Chairman Lee will officially take greater responsibility in the company's business management as a registered board member on behalf of his father Chairman Lee Kun-hee who has been hospitalized since suffering a heart attack in 2014.
"The board of directors determined that we cannot postpone Vice Chairman Lee's appointment as board director and his official participation in business management in order to deal with rapid changes in the business environment and achieve sustainable growth," Samsung Electronics Vice Chairman Kwon Oh-hyun said.
"We anticipate Lee will fulfill his responsibilities and duties as a member of the board to further solidify the company's global position and boost corporate value."
The 48-year-old heir to the nation's largest conglomerate majored in Oriental history at Seoul National University and acquired his master's degree at Japan's Keio University and doctorate from Harvard Business School. He joined Samsung Electronics in 1991 and was promoted to vice president in December 2012.
"He will provide the leadership to take Samsung Electronics to the next level of success, helping the company focus on timely investments, reorganizing businesses to enhance core capabilities and creating a more open corporate culture," the company said in a statement.
As a board member, one of Lee's biggest tasks is likely to be restoration of the electronics giant's reputation, which has been hit hard after a disastrous incident involving the global recall and discontinuation of the Galaxy Note 7, and of the damaged profitability from its fallout.
Final quarterly results
On Thursday, Samsung Electronics said it posted 5.2 trillion won ($4.55 billion) in operating profit in the third quarter, down 29.7 percent from last year's 7.39 trillion won.
The company had 47.82 trillion won in sales, also down 7.5 percent from 51.68 trillion won a year ago, according to a regulatory filing. The sales and operating profit are the lowest in six and eight quarters, respectively.
The disappointing performance is mainly due to the discontinuation of the Note 7 over safety concerns after reports worldwide that it caught fire while charging. The company has not revealed clear reasons for this defect.
Shin Jong-kyun, one of Samsung Electronics' co-CEOs in charge of its mobile business, apologized again for the defect and said the company will get to the bottom of it, Thursday.
"We are thoroughly analyzing the battery cell structure and its internal protection circuits, and manufacturing," Shin said. "We are also looking into handset hardware and software as well as all processes such as logistics. Besides the in-house investigation, we have also requested the help of third-party institutions both at home and abroad. Such thorough investigations will take some time. But we will reveal the cause and share the results."
Samsung Electronics said it will distribute an obligatory software update for all Note 7s in Korea starting Oct. 29 to prevent their batteries from charging beyond 60 percent. The company said this is to urge those who are still using Note 7s to return the handset for a refund or replacement.
Amid such incidents, Samsung Electronics' mobile division still managed to avoid a deficit, announcing an operating profit of 100 billion won in the third quarter, just 4 percent of last year's 2.4 trillion won.
"Smartphone shipments remained solid due to stable sales of our existing budget handsets and flagship devices including the Galaxy S7 and the S7 Edge," the company said in a statement, adding that it expects the S7 will break the sales volume in the Galaxy S series of smartphones.
The company said it will seek a turnaround with the release of its next flagship Galaxy S8 next year by introducing a new design, improved cameras, cloud features and artificial intelligence (AI) services.
Meanwhile, Samsung Electronics recorded favorable results in the semiconductor and display panel businesses.
The company said its semiconductor business generated 3.37 trillion won in operating profit after the introduction of the 48-layer V-NAND flash memory process and the output expansion of 20-nano DRAMs. Its system large-scale integration business also performed well as it has seen an increase in 14-nano foundry orders as well as a sales boost for mid-priced mobile application processors and image sensors.
The company said it will speed up the process shift of its V-NAND flash memory business and boost production of premium solid-state drives for servers next year. It also pledged to expedite the 10-nano for DRAM process and mobile processors.
"We plan to mass-produce V-NAND products at the Pyeongtaek campus starting mid-2017 and will complete facility construction by the end of this year," the company said. "We are setting up equipment on line 17 in the Hwaseong plant to produce V-NAND products, aiming at starting mass-production in the first half of next year."
Samsung Electronics' display business posted 1.2 trillion won in operating profit from an increase in sales of higher value-added OLED panels and LCD products.
Its consumer electronics division also performed well by focusing on selling premium products such as quantum-dot, curved and SUHD TVs.
Samsung Electronics shareholders also approved the plan to sell the group's printer business to Hewlett-Packard (HP). Under the plan, the company will reform its printing business division as a separate subsidiary on Nov. 1 and sell a 100 percent share to HP, as it focuses on core businesses.
The company said it acquired 14.53 million shares in Cheil Worldwide from Samsung C&T through off-hours block trading. It also vowed to announce a new dividend policy by the end of next month.
Samsung Electronics closed at 1,573,000 won on the Seoul bourse, Thursday, up 0.38 percent from the previous day.
By Yoon Sung-won
 |
| Vice Chairman Lee Jae-yong |
Samsung Electronics said Thursday that the appointment of Lee as a member of the board of directors was approved by shareholders at an extraordinary meeting in Seoul.
Expectations are that Vice Chairman Lee will officially take greater responsibility in the company's business management as a registered board member on behalf of his father Chairman Lee Kun-hee who has been hospitalized since suffering a heart attack in 2014.
"The board of directors determined that we cannot postpone Vice Chairman Lee's appointment as board director and his official participation in business management in order to deal with rapid changes in the business environment and achieve sustainable growth," Samsung Electronics Vice Chairman Kwon Oh-hyun said.
"We anticipate Lee will fulfill his responsibilities and duties as a member of the board to further solidify the company's global position and boost corporate value."
The 48-year-old heir to the nation's largest conglomerate majored in Oriental history at Seoul National University and acquired his master's degree at Japan's Keio University and doctorate from Harvard Business School. He joined Samsung Electronics in 1991 and was promoted to vice president in December 2012.
"He will provide the leadership to take Samsung Electronics to the next level of success, helping the company focus on timely investments, reorganizing businesses to enhance core capabilities and creating a more open corporate culture," the company said in a statement.
As a board member, one of Lee's biggest tasks is likely to be restoration of the electronics giant's reputation, which has been hit hard after a disastrous incident involving the global recall and discontinuation of the Galaxy Note 7, and of the damaged profitability from its fallout.
Final quarterly results
On Thursday, Samsung Electronics said it posted 5.2 trillion won ($4.55 billion) in operating profit in the third quarter, down 29.7 percent from last year's 7.39 trillion won.
The company had 47.82 trillion won in sales, also down 7.5 percent from 51.68 trillion won a year ago, according to a regulatory filing. The sales and operating profit are the lowest in six and eight quarters, respectively.
The disappointing performance is mainly due to the discontinuation of the Note 7 over safety concerns after reports worldwide that it caught fire while charging. The company has not revealed clear reasons for this defect.
Shin Jong-kyun, one of Samsung Electronics' co-CEOs in charge of its mobile business, apologized again for the defect and said the company will get to the bottom of it, Thursday.
"We are thoroughly analyzing the battery cell structure and its internal protection circuits, and manufacturing," Shin said. "We are also looking into handset hardware and software as well as all processes such as logistics. Besides the in-house investigation, we have also requested the help of third-party institutions both at home and abroad. Such thorough investigations will take some time. But we will reveal the cause and share the results."
Samsung Electronics said it will distribute an obligatory software update for all Note 7s in Korea starting Oct. 29 to prevent their batteries from charging beyond 60 percent. The company said this is to urge those who are still using Note 7s to return the handset for a refund or replacement.
Amid such incidents, Samsung Electronics' mobile division still managed to avoid a deficit, announcing an operating profit of 100 billion won in the third quarter, just 4 percent of last year's 2.4 trillion won.
"Smartphone shipments remained solid due to stable sales of our existing budget handsets and flagship devices including the Galaxy S7 and the S7 Edge," the company said in a statement, adding that it expects the S7 will break the sales volume in the Galaxy S series of smartphones.
The company said it will seek a turnaround with the release of its next flagship Galaxy S8 next year by introducing a new design, improved cameras, cloud features and artificial intelligence (AI) services.
Meanwhile, Samsung Electronics recorded favorable results in the semiconductor and display panel businesses.
The company said its semiconductor business generated 3.37 trillion won in operating profit after the introduction of the 48-layer V-NAND flash memory process and the output expansion of 20-nano DRAMs. Its system large-scale integration business also performed well as it has seen an increase in 14-nano foundry orders as well as a sales boost for mid-priced mobile application processors and image sensors.
The company said it will speed up the process shift of its V-NAND flash memory business and boost production of premium solid-state drives for servers next year. It also pledged to expedite the 10-nano for DRAM process and mobile processors.
"We plan to mass-produce V-NAND products at the Pyeongtaek campus starting mid-2017 and will complete facility construction by the end of this year," the company said. "We are setting up equipment on line 17 in the Hwaseong plant to produce V-NAND products, aiming at starting mass-production in the first half of next year."
Samsung Electronics' display business posted 1.2 trillion won in operating profit from an increase in sales of higher value-added OLED panels and LCD products.
Its consumer electronics division also performed well by focusing on selling premium products such as quantum-dot, curved and SUHD TVs.
Samsung Electronics shareholders also approved the plan to sell the group's printer business to Hewlett-Packard (HP). Under the plan, the company will reform its printing business division as a separate subsidiary on Nov. 1 and sell a 100 percent share to HP, as it focuses on core businesses.
The company said it acquired 14.53 million shares in Cheil Worldwide from Samsung C&T through off-hours block trading. It also vowed to announce a new dividend policy by the end of next month.
Samsung Electronics closed at 1,573,000 won on the Seoul bourse, Thursday, up 0.38 percent from the previous day.
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