This post has been updated to reflect the announcement of Oh-Hyun Kwon’s resignation.
Samsung Electronics made two announcements today that contrasted starkly with one another in tone. First, it issued an optimistic third-quarter earnings guidance. Then, a few hours later, it posted a resignation letter from chief executive officer and vice chairman Oh-Hyun Kwon, who said it is time for new leadership as the company faces an “unprecedented crisis inside out.”
In terms of earnings, the chaebol has had a good year so far, posting strong first and second-quarter results thanks to its components business, which Kwon also oversees. From a leadership perspective, however, Samsung has had a very difficult year. In August, Samsung vice chairman Jay Y. Lee, who was widely expected to replace his ailing father Lee Kun-hee as chairman of Samsung Group, was sentenced to five years in jail after being found guilty of bribery, embezzlement, capital flight and perjury charges.
Kwon, who has served as Samsung Electronics’ CEO since 2012, also plans to leave his positions as the head of its components and display units and will not seek re-election to its board.
In a letter to employees, Kwon wrote that his resignation “is something I had been thinking long and hard about for quite some time. It has not been an easy decision, but I feel I can no longer put it off. 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, who joined Samsung in 1985, added that it now “needs a new leader more than ever and it is time for me to move to the next chapter of my life.”
Despite the upheaval in its management ranks, Samsung was upbeat in its third-quarter earnings guidance today, forecasting consolidated operating profit of about 14.5 trillion Korean won ($12.8 billion). This amount represents a very healthy 179 percent increase from the 5.2 trillion won it reported in the third quarter of 2016, when its results were hurt by the discontinuation of the Galaxy Note 7.
Samsung is expected to continue benefiting from selling parts to other smartphone makers, including Apple. Though Samsung products like the Galaxy series compete with iOS devices, Apple relies on Samsung to supply key components. For example, Samsung is the largest maker by volume of OLED displays, which Apple switched to for its latest iPhones.
Samsung also forecast third-quarter consolidated sales of about 62 trillion won. It launched the Galaxy Note 8 one month ago, following the release of the Galaxy S8 and S8 Plus earlier this year.
Featured Image: Bloomberg/Contributor/Getty Images
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