Samsung CEO Steps Down Despite Record Profits, Warns Of "Unprecedented Crisis"

Tyler Durden's picture

In a surprise move - and just months after the grandson of the company’s founder was jailed for corruption - the CEO of Samsung, Kwon Oh-hyun has resigned 'to make way for new leadership'. In an odd turn of events, despite record profits, Kwon warned the company faces an "unprecedented crisis."

Kwon had emerged as the public face of Samsung Electronics after Jay Y. Lee, grandson of the company’s founder, was detained on corruption charges and then sentenced to five years in prison in August amid a scandal that brought down South Korea’s president.

The share price slipped on the news...

As Bloomberg reports, Kwon Oh-hyun, who also serves as co-vice chairman, announced his retirement on Friday as the Suwon-based company reported record operating income of 14.5 trillion won ($12.8 billion) on booming demand for displays and memory chips.

He said the company faces an “unprecedented crisis” despite the financial success.

“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,” Kwon said in the statement.

While the latest financial results show Samsung’s business units operating smoothly, that in itself may present risks for Kwon, said Park Ju-gun, who tracks corporate executives at CEOScore.

“Nobody wants to be the chief of Samsung Electronics at a time like this; it’s too risky,” said Park.

 

“It puts that person at odds with the controlling family. Only when he is in the shadow is he playing his role properly.”

Despite the trial, the company’s business has remained robust, helped by strong demand for memory chips.

“It’s the chip prices that are driving up the profit rather than the sales volumes,” said Park Kang-ho, an analyst at Daishin Securities. “We’re expecting an operating profit of about 16 trillion won in the next quarter.”

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Swamp Yankee's picture

Holy cow!  Doom!  Not just any doom mind ye; this is seriously deep kim-chee DooM!

 

Some meaningful deatils on 'why' would have been nice, just sayin....

This sounds more like a vanila changing of the guard.

 

Pass the salt please.

jcaz's picture

Smart man- looked around the room, realized that he's the next patsy in line.......

Stuck on Zero's picture

Samsung and Hyundai are simply arms of the Korean government. Subsidies and protection from foreign competition are the result.

Luc X. Ifer's picture

Did they shown recently interest in acquiring offices in New Zeeland, just my 2 cents ..

ali-ali-al-qomfri's picture

cuz Chips and EMP's don't mix well together.

Who's on the hook for chip failures when the power surges in excess.

or

New Orders came in and he can either play or go-away.

NoDebt's picture

"Nobody wants to be the chief of Samsung Electronics at a time like this; it’s too risky"

Sooooo...... good luck to the next guy?  What a fucking bizarre comment.

 

Luc X. Ifer's picture

Meaning is - get the toys, run - New Zeeland, and cover. Correlate with Trump's not so covered message, bad things coming to Korea.

phatfawzi's picture

im sure some chump will step up. i mean whats the worst that can happen. 

s2man's picture

He will be disgraced,  but,  he will have a golden parachute.

Luc X. Ifer's picture

Does he has a New Zeeland property or know to be looking for one? Be aware.

chumbawamba's picture

No, this is just the sad new vanilla editorial standards of Zero Hedge. They can find doom in a cupcake.

I am Chumbawamba.

old naughty's picture

what unprecedented crisis?

all tech giants fall, sooner or later, no?

Vinividivinci's picture

that's not a very japanese attitude...
but then again, japan is heading to oblivion, so...
golden parachutes for everyone !

gatorengineer's picture

Surprising fact Samsung is Korean....  

Giant Meteor's picture

So you're tellin me, the Germans really DIDN'T bomb Pearl Harbor ?

Greenspazm's picture

So where are the better chicks?

bluez's picture

Well... Um...

I for one would rather not be in South Korea right now.

Something bad might happen.

toady's picture

Must be that second aircraft carrier....

gatorengineer's picture

Ok, I will play, sell phone sales down, PC sales down, tablet sales down.  All of these memory chips are going where?

sm0k4's picture

I logged in for the first time in a year I think, just to up vote this awesome post!

FoggyWorld's picture

Worse than that, all of their beautiful appliances spy on you and now that's out there, Americans anyway are resisting that approach.

Giant Meteor's picture

Apparently down the memory hole ..

Boy oh boy, is this creative accounting thing great or what !?

TrueNorth0691's picture

In everything else that uses chips, which is a lot of stuff. But also they are currently the dominant source of displays for phones (including, now, iPhones) and a whole bunch of other stuff that, needs displays.

SuperRay's picture

So where can you put your money other than the banking system?

CatsPaw's picture

You have money? most people have debt.

You cang ive it to me... ill keep it safe.

techpriest's picture

Most people have debt because they think a new X is a "need" that they "deserve," as opposed to a luxury that they want but should hold off on buying.

The true cost of survival is actually pretty low, esp. if you are creative. If you don't care about looking poor 3-6 years you can build up tremendous amounts of cash, and not worry much about debt again.

Md4's picture

Seems like many don't want to survive.

They want to live.

Madison Avenue tells 'em how...

Ban KKiller's picture

No growth in the charts, all teeveed out. He knows the past growth was falsely based on bank debt bring bought by central banks not people. Ha ha ha ha.

Hope Copy's picture

That is pretty major, and if Tump actually adds an import tax..  I would suggest that Samsung buy some old cruise liners and outfit them for their core manufacturing business

Luc X. Ifer's picture

Also, not much left to improve in the mobile computing space - the bread & butter of Samsung's growth, especially with the rise of open hardware/software for mobile. Tech disruption has short life span before becoming commodity. The big & fast money where made the last generation and current due to tech disruption, everybody is scanning around for the next viable high tech disrupting thing which will allow the same. AI/ML or the Blockchain most likely but these are niche dedicated software and with a very limited market/buyers number - not hardware toys to be sold in huge quantities to the street level loser user.

dark fiber's picture

There will be an unprecedented crisis alright.  But Samsung will be just a rounding error.

Txpl9421's picture

Is he packing boxes of ensure, water and cans of Tuna onto his boat?

CEOs bailing are not usually that candid.

OCnStiggs's picture

You forgot the iodine pills. And his sack of bitcoins.

Greenspazm's picture

Top cell model S8 plus costs $650 in USSA and 740€ in EU

But for what? A fancy super-elongated rounded screen that doesn't snag against your scrotum when carried in your left pants pocket? Fingerprint scanner? Half-baked "Bixby assistant"?

Pesky Varmint's picture

The reason myself, my wife, and most of my friends buy new phones is because

the one they have is starting to screw up and the old contract is up.

Mimir's picture

.. and Samsung Galaxy s8 is simply the best smatphone on the market. Try it !

Pesky Varmint's picture

Yep, it is the most recent one I've bought. And I never buy iCrap

a Smudge by any other name's picture

The process of shopping for a phone involves accepting that they are all infernal devices that are apt to do more harm than good. That by accepting one of these devices, you in some way enslave yourself to a culture of utter depravity, narcissism and destruction.

By generally going with whatever Samsung was popular 2 years ago (and generally for $50 no matter what you paid for it, talk about a depreciating asset), you stay one step behind the filth and corruption so prevalent. This is basically using humanity as a test bed. You guys work out the bugs. You guys suffer the pathology (myopia, faper's elbow, total lack of situational awareness) so I know what to avoid.

Put another way, every time one of you roasts to death inside a burning Tesla puts me one step closer to a $50 Tesla.

5000yl's picture

The exact day I paid my phone off I noticed the ear speaker had gone almost completly silent. I cannot hear without the phone on speaker mode and the volume all the way up. Thats enough to make me want to bump stock a couple verizon stores

techpriest's picture

I doubt the local shop owner has any say on Samsung's manufacturing decisions.

Taffy Lewis's picture

More features than advertised if you carry it in your pants pocket: you'll lose about 10% in bone density in that area and, if you are a guy, you'll have lower sperm count...

rbianco3's picture

$650! Ouch! When replacing my broken phone- decided on fifty dollar go phone for fifty bucks and asked ATT to kindly activate and add to my plan. Doesn't have finger print scanner but that benefits other people not me.

Avoid scrotal damage and weak hard on- keep it in the back pocket.

A Stockwork Orange's picture

Will Samsung stock explode in our faces like their phones?

I don't think they've kept up with their reputation.

Bai Suzhen's picture

I mean, really...  How many fucking HD flat screen TVs can they sell?  Hell, even the looters don't need any more, and Wally World is practically giving them away.  The new Galaxy phones are no better than the old ones, so what's the reason to upgrade?  Ane who needs a five thousand dollar refrigerator that's connected to the Internet?  But the real reason probably has something to do with staying out of jail for some reason or other.