[Photo by Namgung Jin-woong = timeid@ajunews.com]
Samsung Electronics embarked on a costly refund program Thursday as a US hedge fund made a friendly gesture suggesting the world's largest smartphone maker could use its smartphone debacle for a chance to improve corporate governance.
US activist fund Elliott Management said in a statement it does not view the crisis as diminishing Samsung's market position.
"The recent issues surrounding the Galaxy Note 7, while unfortunate, do not diminish our view that Samsung Electronics is a leading global technology company with a world-class brand," said Elliott's two affiliates, Blake Capital and Potter Capital.
"We believe that the company's forthcoming new leadership can build on the company's initial response to this situation by adopting best-in-class operational and corporate governance improvements."
Last week Elliott urged Samsung to split into holding and operating companies, list the operating company on the NASDAQ stock exchange, pay a special dividend and consider an equity merger with Samsung C&T.
Blake Capital and Potter Capital hold a combined 0.62 percent stake in Samsung.
Elliott staged a high-profile proxy war last year against a merger of Cheil Industries and Samsung C&T. Samsung scored a narrow victory but took steps to protect the interests of minority shareholders.
Samsung has raised a huge amount of money in reserve through the sale of non-core units in preparation for the transfer of leadership from the group's ailing patriarch, Lee Kun-hee, to his only son and vice chairman Jay Y. Lee.
Analysts in Seoul have floated a possible scenario that the group would be streamlined into two major sections with Samsung Life Insurance controlling financial units and Samsung Electronics spearheading nonfinancial affiliates such as Samsung SDS.
Jay Y. Lee owns a 0.59 percent stake in Samsung Electronics, while foreign shareholders control nearly 50 percent. A corporate split will help the vice chairman and friendly shareholders raise their stake.
Samsung's decision this week to stop sales of Galaxy Note 7 is expected to cause "noticeable changes" in shipments of major smartphone brands, according to global market researcher TrendForce.
Samsung's debacle will alter the market shares of smartphone brands in the large-size model segment with a "substantial" portion of consumers' demand going to Chinese brands like Huawei, Vivo and OPPO, it said.
"Rival brands are anticipated to take advantage of Samsung's crisis and expand their smartphone production. This in turn would aggravate the supply shortage situation in the component markets," TrendForce said.
For its part, Samsung is expected to shift its marketing resources and promotional efforts to other Galaxy smartphone series such as Galaxy S7, it said.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
