Samsung

The world’s top smartphone vendor may have overcome its biggest PR crisis ever a lot faster than anyone anticipated, with minimal long-term financial repercussions and no lasting brand damage, but something way more serious than a few flaming batteries is crippling Samsung’s management for years.

Ironically, the chaebol’s leadership troubles just deepened to hit a new low on the same day that Samsung Electronics announced its Q3 2017 earnings guidance, officially forecasting a second consecutive profit record.

While the latest full quarterly results are to be released towards the end of the month, detailing the July – September performance of each division coming together to form a lean, mean, money-making machine, it’s safe to assume semiconductors shined brightest, followed by displays and mobile devices.

With memory chips at least as hotly demanded and lucrative as before, high-margin OLED screens sought after by arch-rivals, and both the Galaxy S8 and Note 8 reportedly selling like hotcakes, it’s really no surprise that the consolidated operating profit is expected to jump to approximately 14.5 trillion Korean won from KRW 5.2tn during Q3 2016.

The quarter-on-quarter growth should be marginal but important, from 14.07 trillion won, as well as from 61 to 62 trillion won in consolidated sales. Keep in mind that the GS8 probably reached its popularity peak over the previous three months, and Note-series phones are usually less successful than their S cousins.

Still, there’s no room for celebration as far as both Samsung Electronics and the larger Samsung Group are concerned. That’s because Kwon Oh-hyun follows a number of high-ranking officials out the door in the wake of one too many corruption scandals.

Kwon is undoubtedly the highest-profile, most valuable employee to leave the company after the arrest and prison sentencing of Samsung Group vice chairman and de facto head Jay Y. Lee. We’re talking the CEO and Vice Chairman of Samsung Electronics here, who also just so happens to lead the group’s various ultra-profitable components businesses. Yes, including Samsung Display and the memory chip division Kwon is largely credited for building into an industry flagship.

Fittingly nicknamed “Mr. Chip”, Kwon Oh-hyun believes the “time has come for the company to start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry.” A Samsung employee since 1985, he feels “we are confronted with unprecedented crisis inside out”, and despite “record earnings right now… we are not able to even get close to finding new growth engines by reading future trends.” That can’t be good.

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