Samsung: Numbers up despite Note 7 recall, other businesses keep it afloat

The latest Galaxy Note 7 problem has delivered some effects to Samsung definitely. This is perhaps the biggest recall yet for the company. It’s something that nobody expected because the Note 7 phablet is one of the highly anticipated phones this year. It seems that skipping the ‘6’ is bad luck. Well, there’s really no luck in tech. It’s either the company makes it or not.

We’re assuming Samsung never knew about the problem in battery production and learned only of it after reports of overheating and explosions came in. Only a few days after the official commercial launch in August, the South Korean tech giant quickly announced a recall. Sales were discontinued and production stopped. Soon, mobile carriers and retailers began announcing their replacement procedures. Of the 2.5 million Note 7 units that shipped, over a million now have safe batteries. We’re guessing the number of phones with safe batteries are still increasing as Samsung is determined to replace every unit.

A recall sounds simple. It’s not easy but any organized company should be able to do it. So far, so good. Sales in different countries and regions are about to resume and some carriers have already started to sell the phone.

We know Samsung may see some loss but a recent Bloomberg report is saying that despite the recall, profits are still up. Thanks to the memory chips and displays the company also manufactures. Several OEMs depend on Samsung for these components. Even if the mobile division of Samsung is suffering, the components division is still doing good. In a way, this pulls up the tech giant.

Samsung’s stock is up 0.5 percent at 1.7 million won in a recent earnings report. Q3 is over and Bloomberg reported an increase on the income at 5.5% to 7.8 trillion won ($7 billion). It actually exceeded the average of analysts’ estimates at 7.58 trillion-won.

samsung-galaxy-note7

We’re expecting some more challenges along the way since Samsung is still receiving new complaints even after the recall. The latest blow (pun intended) was another explosion of a replacement Note 7 catching fire inside an airplane before take-off. Investigations are still ongoing so Samsung doesn’t have any official response yet.

Another challenge has come up though when Paul Elliott Singer suggested that Samsung restructures. The billionaire activist is saying that Samsung needs to do major changes like split into two–a holding entity and an operating company. This move could help Samsung and he’s positive that Jay Y. Lee, heir apparent at Samsung Electronics, won’t have a problem embracing the idea. Singer said Lee is open to modernizing his family’s empire and there’s a big chance he would follow the plan.

Specifically, Singer also proposed that the company do the following as shared by Bloomberg: dual-list the operating division on a U.S. exchange, accept three independent board members, and give current shareholders a dividend of 30 trillion Korean won.

Singer’s proposal is also said to be in line with what Lee wants according to an earlier report by the Wall Street Journal. If all these things push through, then Samsung will experience a major overhaul. It should be nothing to worry about because these Samsung executives are knowledgeable enough to drive the company to a better future.

The South Korean tech giant isn’t going down. Maybe the mobile division is experiencing some challenges but Samsung still has other businesses that bring in money and profits. They just need to rethink the business strategy.

VIA: Bloomberg