Samsung May Split Company in Two to Allay Investor Concerns

[MacRumors]

Samsung Electronics announced on Tuesday it is considering splitting itself into a holding company and an operating company in order to boost shareholder value, in what could be the biggest shake-up in the South Korean tech giant's history.

According to Reuters, the move is part of a bid to improve investor returns after Samsung came under pressure from shareholders to simplify its business structure. Critics argue that the current structure makes it difficult to value Samsung since its assets are spread across various sister companies and affiliates. Establishing a separate holding firm would bring these under one name, improve transparency, and make it easier to value Samsung Electronics' business.

Samsung said it would also increase returns to shareholders by one third and accelerate its share buy-back program. The plans come after U.S. hedge fund Elliot Management, which owns 0.6 percent of Samsung, called for a managed split of the company last month.

A split in two of the company has been a subject of speculation among market analysts for a while and would allow Samsung to list on additional stock exchanges around the world. However, some say any potential split could hand more control back to the original family owners and be a particularly favorable outcome for Samsung heir apparent Lee Jae-Yong, who was recently nominated for a seat on the company board.

Despite the announcement, Samsung offered little detail on the potential restructuring and said it was "absolutely neutral" about whether to proceed. "The review does not indicate the management or the board's intention one way or another," said the company in a statement, adding it had hired external advisers for a potentially six month-long review process.

While Samsung moves to assuage investor concerns, the company still has to win back confidence in its consumer mobile division after its disastrous Galaxy Note7 recall in early September. Samsung's share of the smartphone market dropped in the third quarter of 2016 to its lowest level in nearly two years, with financial results for the fourth quarter expected to suffer more after the subsequent discontinuation of the flagship phone.

Article Link: Samsung May Split Company in Two to Allay Investor Concerns

 

[aussiephil]

They should stop copying and attempt to be an actual reputable company.

 

[miknos]

They should stop copying and attempt to be an actual reputable company.

Why bother spending in R&D? Let Apple do it instead. It's been (very) profitable thus far.

 

[djcerla]

More aptly, "Mixed Legal Businesses" and "Bribes, Corruption and Other Bets".

 

[Abazigal]

Critics argue that the current structure makes it difficult to value Samsung since its assets are spread across various sister companies and affiliates.

I thought that's precisely the whole idea.

 

[okboy]

They should stop copying and attempt to be an actual reputable company.

This does not solve the company's problems. They are deeply, deeply corrupt. The recent raids over their connections with the cult influencing the prime minister is notable, but just a drop in the bucket.

 

[HobeSoundDarryl]

I thought that's precisely the whole idea.

Right. Another day, other companies wanting to merge into one bigger company and the story is spun just slightly differently... that merging into a structure like Samsungs is about diversifying risk across many business units, lowering risk should any one business unit have trouble:

"Critics argue that the current structure (of separate business structures) makes it difficult to value <company buying the other company>, since their separate assets are spread across various sister companies & affiliates." Merging these 2 companies together can realize more favorable ROIs by streamlining business operations, eliminating redundancy and facilitating additional focus under one unified brand and leadership.

Basically IMO, some banker wants to earn a commission, so big corporate structure changes look like easy money. Hop forward 5 or 15 years and some other banker wanting to earn commission will be spinning merging the splits into one larger company to "streamline operations," etc. It's kind of money-making "busy work" for the 1%ers.

 

[SethBoy]

Pre-split: Samsung

Post-split: Orange and Pear

 

[MacBH928]

Interesting how things change...
back in the 90's it was all about the Sony, Sharp, and Toshiba...

Samsung were more of a fridge and washing machines company....at least thats how I remember it.

 

[D.T.]

Maybe they should split into two business units: products that do explode and products that don't explode.

 

[NightwalkerUK]

Apply should do exactly the same IMHO. One side the consumer trinket market, the other the computer and pro market. If they did this we may actually see some real innovation within their product designs, at the very least, some more frequent updates - I'm looking at you Macpro.

 

[JediZenMaster]

They should stop copying and attempt to be an actual reputable company.

Stop copying? Where have you been for the last few years. The s7 and s7 edge what is that copied from?

Seems to me that maybe Apple should not copy but they are next year with the same type of curved display.

 

[Phil A.]

Interesting how things change...
back in the 90's it was all about the Sony, Sharp, and Toshiba...

Samsung were more of a fridge and washing machines company....at least thats how I remember it.

I don't know when they changed, but before they were "taking inspiration" from the iPhone, they were doing the same with Blackberry and were taken to court in 2007 by RIM for naming their qwerty phone that looked very similar to blackberry devices the "Blackjack" (it was settled out of court). It did bear more than a passing resemblance to the Blackberries of the time...

 

[thats all folks]

the whole world should be calling for Samsung to be broken up (though not in the way proposed here). Samsung is practically a branch of the Korean government (and not the nice one). And it's run more like a kingdom than a company. some cross between comcast and the church of scientology.

 

[NightwalkerUK]

Stop copying? Where have you been for the last few years. The s7 and s7 edge what is that copied from?

Seems to me that maybe Apple should not copy but they are next year with the same type of curved display.

Agree 100%, Apple haven't had an innovative idea for ages now, their iOS has slowly 'borrowed' ideas from Android (for the better) while the phones have stagnated for the past three generations now.

As stated above, the Mac line is just bobbing along on the surface both design wise and innovatively.

This coming from a die hard Apple fan too, they're long overdue a fresh injection of ideas.

 

[macTW]

So basically... Alphabet.

 

[BeefCake 15]

Aside from the Fanboyism of Samsung hating, Samsung is a very successful company *doesn't excuse their mishaps and shadiness* and a break-up would be better for them in the long run.

 

[Aldaris]

Samsung recently acquired Harman Kardons parent company (including JBL). Will be interesting to see how they navigate a split.

 

[zohaali146]

Why bother spending in R&D? Let Apple do it instead. It's been (very) profitable thus far.

Just found your reply a bit humorous. No pun intended. #Peace

 

[Cloudkicker]

They should stop copying and attempt to be an actual reputable company.

Wow. A company that's been around 78 years... that's made kitchen/laundry appliances... that's made TVs/DVD players when Steve Jobs was tinkering in a dippy garage can't do what corporations have done over & over again because Sainted Apple did it.

Does Apple have a patent for that, or is Samsung "splitting it wrong"? Fanboyism.

 

[kdarling]

Why bother spending in R&D? Let Apple do it instead. It's been (very) profitable thus far.

Samsung has spent far more on R&D than Apple ever will.

That's why Apple turned to Samsung to fab their first processors, to buy Samsung Flash memory and other chips, and soon to buy Samsung OLEDs.

Not to mention all the cellular patents Samsung created, and the billions invested along with other companies in creating the very worldwide infrastructure and market that Apple came late to and made so much money on.

I don't know when they changed, but before they were "taking inspiration" from the iPhone, they were doing the same with Blackberry and were taken to court in 2007 by RIM for naming their qwerty phone that looked very similar to blackberry devices the "Blackjack" (it was settled out of court). It did bear more than a passing resemblance to the Blackberries of the time...

Yep, that's true. Samsung used as many design cues as possible from the Blackberry. Of course, it was not really in competition with the BB, since only a real BB could run on the BB network.

As for copying looks and features, Apple is not shy about that either. For minor example:

On the good side, Apple had a cross license from HTC. On the bad side, they got that license by blackmailing HTC with ridiculous patents like slide to unlock, and forcing HTC pay a fee per device to boot.

Ironically, the cross license didn't help HTC from losing its position as top Android maker.