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Samsung Electronics Co CEO resigns

‘UNPRECEDENTED CRISIS’:Despite Samsung’s spectacular Q3 performance, chief executive Kwon Oh-hyun said the best-ever results were the fruit of past decisions


Samsung CEO Kwon Oh-hyun is shown speaking at an annual meeting of shareholders in Seoul, South Korea, on March 14, 2014.


Samsung Electronics Co chief executive Kwon Oh-hyun yesterday resigned, saying that the South Korean tech giant was facing an “unprecedented crisis,” even as it expected profits to hit an all-time high in the third quarter.

Kwon’s resignation comes as the company struggles to overcome a bribery scandal that sent Lee Jae-yong, its de facto head and heir apparent to the Samsung empire, to jail.

However, in a sign of good news for the company, its estimated operating profits for the third quarter of 14.5 trillion won (US$12.8 billion) marked a record for quarterly profit, nearly tripling the 5.2 trillion won earned a year earlier.

Sales are expected to have surged 29.65 percent year-on-year to 62 trillion won, with the booming semiconductor business boosting the company’s bottom line.

Samsung is set to release its final earnings report later this month.

“The results are good ones that largely meet market expectations,” Dongbu Securities Co analyst Kwon Sung-ryul said.

“The company has been riding a global semiconductor boom,” he said, adding that the semiconductor business alone is believed to have contributed 10 trillion won to the operating profit.

Yonhap Infomax data, based on research from 21 securities firms, also showed that Samsung is expected to post an operating profit of 16 trillion won in the fourth quarter, up 74 percent from a year earlier.

The release of new models, including the iPhone X by rival Apple Inc could weigh on Samsung’s mobile sales, but will also help its smartphones parts business, Mirae Asset Daewoo Securities Co analyst Doh Hyun-woo said in a report.

The consumer electronics division would also benefit from strong seasonal demand, he added.

Despite the spectacular performance, Kwon said the company was in the throes of an “unprecedented crisis” as he announced his intention to step down.

“Fortunately, the company is now producing best-ever results but this is merely a fruit of decisions and investment made in the past,” he said in a statement.

“As we are confronted with unprecedented crisis inside out, I believe that the time has now come for the company [to] start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” Kwon said.

Samsung has been seeking to move past a bribery scandal that saw Lee thrown into jail, and to overcome a damaging recall last year of its flagship Galaxy Note 7 smartphone over exploding batteries.

Lee, who was found guilty in August of bribery, perjury and other charges relating to payments made by Samsung to ousted president Park Geun-hye’s secret confidante Choi Soon-sil, is appealing his five-year sentence.

Shares in Samsung Electronics yesterday closed 1.46 percent down on heavy profit-taking.

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