Samsung Electronics weathered its Galaxy Note 7 fiasco, from the financial perspective, thanks to earnings surprise in the semiconductor business, but uncertainty remained about whether the company can restore consumer trust as well as about the fate of its heir apparent.

Samsung
Samsung
Samsung posted 9.22 trillion won (7.9 billion U.S. dollars) in operating profit in the October-December quarter, up 50.11 percent from a year earlier, a regulatory filing showed on Tuesday.

It was the third-biggest profit ever recorded by the world’s largest smartphone maker by shipments, whose brand value was severely damaged after discontinuing its flagship Note 7 phablet in October.

The ill-fated smartphone, which was launched in August to lavish praise, embarrassed Samsung for reports of the devices catching fire or even exploding without any external cause.

Samsung ordered a global recall in September of about 2.5 million Note 7s, but explosion reports continued from the replacement gadgets, resulting in the depletion of consumer trust.

The mobile division’s fourth-quarter operating profit was 2.5 trillion won, slightly over a quarter of the total profit. Before the Note 7 debacle, the handset-making unit had accounted for over half of earnings.

The void was filled by the semiconductor business, which logged 4.95 trillion won in operating profit, or over half of the fourth-quarter total. It surpassed the previous quarterly high of 3.66 trillion won tallied in the third quarter of 2015.

Samsung is forecast to focus more on component businesses, including display panels, amid uncertainty over the mobile phone unit. The release of its next Galaxy S range was reportedly delayed to sometime in April, while the launch date of Galaxy Note 8 is veiled in a mist.

Adding to the uncertainty, the fate of Samsung Electronics Vice Chairman Lee Jae-yong is still at the hands of an independent counsel team investigating the scandal involving South Korean President Park Geun-hye that led to her impeachment.

Lee, who has in effect been leading the Samsung Group, the country’s biggest family-controlled conglomerate, is suspected of bribing President Park’s longtime confidante, Choi Soon-sil, who is at the center of the scandal.

His father, Chairman Lee Kun-hee, has been hospitalized for over two and half years for a heart attack.

The special prosecutors sought an arrest warrant for the Samsung heir, which was rejected by a Seoul court. They indicated another attempt to retain the de-facto Samsung chief with further investigations into the bribery case.

Possible detention of the vice chairman is not expected to roil Samsung’s operations as each affiliate has its own professional management team, which means normal operations without the Samsung heir.

The detention, however, will damage Samsung’s brand image which was hit hardest by the Note 7 fiasco.

Samsung’s fourth-quarter revenue inched up 0.03 percent over the year to 53.33 trillion won.

For the whole year of 2016, Samsung recorded 29.24 trillion won of operating profit on revenue of 201.87 trillion won. The profit was up 10.7 percent from the previous year, with the revenue edging up 0.6 percent. Enditem

Source: Xinhua/NewsGhana.com.gh

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