Samsung Electronics announced that its third-quarter operating profit will likely surge to a record new high. The Q3 operating profit is forecasted to be around $12.8 billion to top analysts’ prediction. In amn official statement released by the South Korean tech giant, Q3 operating profit would triple the $4.6 billion that was recorded in the same period last year.
The market reacted positively to the news as the company’s shares reach an all-time high of 2,396 won last Friday before falling 1.5% in the afternoon hours. The third quarter earnings were bolstered by the increasing demand for memory chip with greater storage capacity produced by the company.
CEO Kwon Announced his resignation
However, in another news, the South Korean tech giant made another announcement that it’s CEO and vice chairman, Kwon Oh-Hyun will step down at the end of his term in March. The statement was released on the same day the firm predicted a record high third-quarter operating profit of $12.8 billion that is driven by the chip business that Kwon OH-Hyun built from scratch.
This shocking resignation news of Mr. Kwon Oh-Hyun came at a time when he was expected to be in charge of a bigger role following the arrest of the company’s heir Jay Y. Lee in February over bribery. Analysts had also expected Kwon Oh-Hun to take a bigger role following and exit of some of the company’s key executive in the wake of the bribery scandal.
Samsung hopes to jump through hoops
The predicted third-quarter operating profit was boosted by the sales made from the newly launched Galaxy Note 8, which has increased the mobile profit as the company continues to recover from last year’s loss caused by the retraction of the exploding Note 7 devices.
In the words of Kim Woon-ho, an analyst at IBK investment and Security, “Memory chips have entered a brave new world. The rate of supply increase has slowed drastically, while demand has exceeded expectations, rapidly lifting prices.”
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In addition, the company is expected to announce a new shareholder return policy for the next three years after the company releases its third quarter earning result by the end of October. According to the predictions made, the company’s revenue is also likely to see a rise of around 29.7% more than last year’s revenue to around $54.9 billion.
An old guard moving out
Jay Y. Lee was arrested in February after his involvement in a bribery scandal was revealed. This involves payment of tens of millions of dollars to South Korean President, Park Geun-Hye, which led to the impeachment of the South Korean president. Jay was sentenced to 5 years imprisonment in August after he was found guilty of the corruptive action.
However, analysts think that the resignation of the CEO is material to Samsung’s fate going forward.“The timing is nonsensical, Park Ju-gun, head of research firm CEOscore said, Samsung tipped record earning, it’s going to be better in the fourth-quarter, and all this has been driven by Kwon’s component business.”
CEO Kwon made the decision to leave the company following the exit of Choi Gee-sung, his mentor, who left after he was accused in the wake of the bribery scandal. However, with Kwon exit, the company would have to fill more important role as soon as possible.
“The time has come to start anew with a new spirit and young leadership.” Kwon Oh-Hyun said, we are fortunately making record earnings right now, but this is the fruit of past decisions and investments; we are not able to even get close to finding new growth engines by reading future trends now.”