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Businesses

Samsung Electronics Considers Split as Investor Pressure Builds (reuters.com) 20

Tech giant Samsung Electronics, under pressure from shareholders to improve investor returns, said on Tuesday it will consider creating a holding company in what would be the biggest shake-up in its 47-year history. Reuters reports: The move and a plan to raise dividends come after U.S. hedge fund Elliott Management in October called for the South Korean firm to split itself into a holding vehicle and an operating company. However, the world's top maker of smartphones, memory chips and televisions, said it was "absolutely neutral" about whether to proceed and provided little detail on the potential restructuring, underwhelming investors. "The review does not indicate the management or the board's intention one way or another," the company said in a statement, adding it had hired external advisers for a review expected to take at least six months. Shares in Samsung, worth $224 billion combined, finished unchanged on the day at 1.677 million won ($1,434) each. The 2016 dividend boost fell short of some expectations, while uncertainty over the restructuring kept investors at bay, analysts said.

Samsung Electronics Considers Split as Investor Pressure Builds

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  • by OutOnARock ( 935713 ) on Tuesday November 29, 2016 @02:05PM (#53387075)
    what will they think of next.....

    whatever they need to keep the cash and screw the customer.....

    operations just goes bankrupt and holding starts a new one....

    holding company keeps all the money...
  • by alvinrod ( 889928 ) on Tuesday November 29, 2016 @02:12PM (#53387117)
    Samsung is doing as well as it does because it's a huge company that makes almost everything including many of the components that are used to build its other products. If there's one particular division that's a complete and ongoing money pit they could consider selling it off or just shutting it down, but splitting up the entire company is just short-sighted profiteering.
    • by Anonymous Coward

      It's a hedge fund that's calling for it. Do they do anything else other than profiteering?

    • The idea is to split it up to form a holding company and allow a more simplified corporate governance. Right now Samsung is a bloated mess at the top, and needs to be simplified to save costs. Also they can avoid paying estate taxes when the current CEO/major shareholder dies. That is really what this is about.
  • corporate looting (Score:5, Insightful)

    by korgitser ( 1809018 ) on Tuesday November 29, 2016 @02:44PM (#53387377)

    This starts out is an obvious example of corporate looting. The holding company will have the power to sell off parts of the operating company. That's what holding is. In a corporate looting environment, selling off parts means selling the company for scrap metal. Selling the scrap is what constitutes as 'improved investor returns' mentioned in TFA. Invented by the British and perfected by the Americans, asset stripping is the perfect robber baron game.
    First you sell every part of company you can, calling the sold parts non-essential, non-core competence and lossmakers. This makes the company's bottom line look awesome for a while, which raises stock prices. Nevermind the long term crippling of the company.
    You then get to walk away with the money from the sales as dividends. If you can pull it off, you proceed to take out loans on the company, backed with the risen stock and dividends, and hyped about plans for a glorious future under the so-well-performing new management. You then pocket this cash infusion while leaving the empty shell of the company with the greatest possible amount of debt you can arrange. Lastly you sell the still-inflated stock for a sweet profit and walk away having skinned the company three times over.

    But the rabbit hole goes deeper in this case. What is interesting here is that Samsung is not really a publicly traded company as we understand it. The Koreans have their own model of enterprise, the chaebol, and pretty much all the big players in South Korea are chaebols. These have heavy connections with the state, you can almost call it state ownership if you need to. Money, influence and political needs flow rather freely between the state and the company. If the company is short of cash, they will get an infusion from the state. If the state is short of cash, they get an infusion from the company. There is also quite an amount of corruption that happens in these conditions, but bear in mind that the state-private model of the chaebol is what built South Korea and is still what makes the country live long and prosper.
    Have no surprise then that what is reported as a profit or a loss by the company, is mostly a meaningless number crafted to fill some particular purpose of a particular time. Don't want to report a loss? Here's a billion from the Korean state. After all, the state does not care much in which pocket it's money is on a certain moment as long as it's there and filling a purpose. All players worthy of their salt on the stock market are of course aware of this and plan their actions accordingly.
    So when you manage to create a new governing body for Samsung this way, you also get to have a very influential connection into the South Korean government, and this connection also has it's dark side. This might mean that the players behind this are not only setting out to loot Samsung, but the whole of South Korean state and economy. Which is not a far fetch considering the way countries are being fscked up left and right these days... Interesting times.

  • Split into a thousand pieces. Non-combustible ones, if possible. Nah.

If all else fails, lower your standards.

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