Following the Note 7 recall and investor backlash, Samsung may split in two

Following the Note 7 recall and investor backlash, Samsung may split in two
Recently, activist hedge fund Elliott Management, which owns a small stake in Samsung, asked that the crown jewel electronics division of the company be spun off and listed on the NASDAQ, joining the pantheon of tech giants there like Apple, Microsoft, or Google's parent company, Alphabet. This would make Samsung Electronics more transparent and easier to control for shareholders, and would ensure management changes of the type that might have avoided the double Note 7 recall.

Samsung is run like a typical "chaebol" structure out of South Korea. "Chae" means wealth, and "bol" is a clan, and that's all you need to know about how companies like Samsung, LG, Hyundai and others are often run - as loosely knit family business conglomerates. The family owns stakes in each of the tens of holding companies, which in turn have ownership in the other firms in the network. This prevents outside investors from breaking up the conglomerate, but also enshrines performance opacity, as well as rigid "no questions asked" top-down management policy.

Well, fast forward to yesterday's board meeting, and Samsung came up with a statement that it is considering a restructuring, and is willing to entertain the hedge fund's ideas, as well as boost dividends. The board of directors recently appointed Chairman Lee's son as a member, which might lead to some drastic changes, at least for South Korean standards. Still, instead of taking the "vulture capitalist" (Korean media term) hedge fund's advice to take Samsung Electronics public immediately, the company memo says:


Needless to say, the sheer notion of public listing for Samsung Electronics with the accompanying external interference in the management process, might have been unthinkable just a few months ago, but the unfortunate Note 7 recall, a timeline of which you can preview below, has apparently resulted in a lot of soul-searching over at Samsung.


source: Samsung

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16 Comments

1. Dresko

Posts: 6; Member since: Jul 08, 2016

One thing has nothing to do with the other...

2. zunaidahmed

Posts: 1182; Member since: Dec 24, 2011

It does, no one would have questioned the structure of the company and how it is ran if the note 7 fiasco wouldn't have happened. Investors would have been happy with the "old" way of doing things, but now they aren't, which is what this article is stating

5. NonFanBoy

Posts: 180; Member since: May 28, 2015

Lol!! PhoneArena. In other news, Samsung S8 is rumored to have 8 GB Ram because Gear S3 has a dual core processor. What has one thing got to do with another. Here is how to report news:http://www.reuters.com/article/us-samsung-elec-restructuring-idUSKBN13N2GShttp://www.sammobile.com/2016/11/29/samsung-confirms-its-thinking-about-a-split-as-it-increases-dividend-payout/

9. Settings

Posts: 2943; Member since: Jul 02, 2014

When one component fails, it fails alone. When one component succeeded, everyone succeeds.

10. darkkjedii

Posts: 30836; Member since: Feb 05, 2011

Go sit on the board, and tell them that. Come back, and let us know how it went, and what they said.

3. kent-gaga

Posts: 609; Member since: Apr 10, 2012

is it just me or this article is really really hard to understand?

6. killer7D

Posts: 550; Member since: Sep 18, 2014

The title is somehow not matching with the content. Most important part is: Note 7 recalled twice!

8. rd_nest

Posts: 1656; Member since: Jun 06, 2010

LOL.. that's typical phonearena quality journalism. Next time someone goes to sleep or eat, they will associated that with Note 7.

4. wando77

Posts: 1166; Member since: Aug 23, 2012

TERRIBLE article. Using nothing but a rumour as an excuse to drag up the note 7 incident AGAIN. I can imagine the start of the next few samsung galaxy reviews.... Galaxy s8 - "This is Samsung's first phone since the Galaxy note 7 debacle". Galaxy note 8 - "This is Samsung's first note phone since the Note 7 debacle ". Galaxy note 9 - "After the success of last year's phone, can the note 9 make it two in a row since the Galaxy note 7 debacle?"

7. Plasticsh1t

Posts: 3092; Member since: Sep 01, 2014

They have to get the ad revenue y'know.

13. sissy246

Posts: 7006; Member since: Mar 04, 2015

Not with ad blocker

11. fonelover

Posts: 255; Member since: Mar 19, 2015

Note7 debacle didn't happen because of the complex company structure, so why they have to split?

12. darkkjedii

Posts: 30836; Member since: Feb 05, 2011

Go ask the board of directors.

14. NarutoKage14

Posts: 1306; Member since: Aug 31, 2016

It's a strategic business move that's under consideration. When companies get too big they sometimes split off their various divisions to keep potential losses separated.

15. TheOldOne

Posts: 196; Member since: Mar 29, 2012

waaaay to much time on your handsto write this article, OOOOR paid by "someone" to do it. which one is it?!

16. Fellwalker

Posts: 521; Member since: Apr 04, 2014

Hedge funds are out to make quick profits and leave destruction in their wake so that their next target has a clearer run. These so called investors don't care about the long term and will use any lever to do whatever it takes to increase short term value and get out.

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