Samsung Expects Record Profits, But CEO Chooses To Resign

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Samsung is doing great in terms of profits and revenue, but is witnessing stressed times at the top level management. In August, the group scion Jay Y. Lee was put behind bars on charges of bribery. Now CEO and Vice chairman of Samsung Electronics, Kwon Oh-hyun, has decided to step down from the management, according to Bloomberg. The timing of the resignation was odd as the South Korean giant projected record profits for the third-quarter.

Buzz was that Kwon would assume greater importance in the company after Lee was arrested. Jay Lee, was accused of passing on large payments to the foundations run by South Korea’s former president, Park Geun-hye.

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

The Samsung CEO said he is so proud to have contributed in developing Samsung as one of the most valuable companies in the world. “We have come a long way to create a company that truly changes how people live, work and communicate with each other. But now the company needs a new leader more than ever and it is time for me to move to the next chapter of my life,” he said in the letter.

However, Park Ju-gun, head of the research firm CEO Score, told Reuters that the timing is “nonsensical” as the fourth-quarter is going to be even better for the company, and these are all the efforts of Kwon. For the third-quarter, Samsung is expecting a revenue of 62 trillion, an increase from 47.8 trillion in the same period last year, when the company was marred by the blasting Galaxy Note 7 events.

Samsung has done well in recent quarters on the back of strong demand for memory chips. Contract prices for the 32-gigabyte DRAM server modules have surged 7.2% in the September quarter from the June period. On the other hand, 128-gigabyte MLC NAND flash memory chips surged 4.7% in the same period, according to inSpectrum Tech Inc.

Further, Chung Sun-sup, head of the corporate analysis firm, said that Kwon had been the face of the company ever since the company had been engulfed in legal troubles. In the near future, the company may not have any public face that can interact with the outside world, Chung told Bloomberg.

Talking of who could succeed as Samsung CEO, Mark Newman, senior research analyst at Sanford C. Bernstein, noted that it could either be mobile products head J.K. Shin, or Kim Ki-nam, the President of Samsung’s semiconductor business. “I think the company is going to be fine. The company just needs to find a way to fill this hole that Kwon is leaving,” the analyst told Bloomberg.

Kwon, 64, who spent half his life working at Samsung, will also step down from his position on the board and as CEO of Samsung Display, in March 2018. As of now, there is no comment from the Korean company as to who could replace Kwon.

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