Samsung Electronics profit down 18 pc on huge $1 bn bonus payout; Galaxy S4, Note also lose out to iPhones

Samsung ElectronicsA passenger using his mobile phone walks past an advertisement promoting Samsung Electronics' Galaxy Note 3 at its exhibition hall at a railway station in Seoul. (Reuters)

Samsung Electronics earned less than even the most conservative analyst forecast in October-December after handing out an estimated $1 billion in bonuses to mark 20 years since its chairman set it on the road to becoming a global behemoth.

The world's largest smartphone maker has splashed out on its employees from a cash pile of around $50 billion just two months after increasing its dividend yield far less than many investors had expected.

Fourth-quarter operating profit was likely 8.3 trillion won, down 6 per cent on year and 18 per cent from a record third quarter, Samsung Electronics Co Ltd said on Tuesday before a final reading on January 24.

The figure was pulled down by bonuses given to employees high and low commemorating Chairman Lee Kun-hee's "New Management" strategy which analysts put at 300 billion to 700 billion won.

The profit would be less than the most bearish forecast among 23 analysts polled by Reuters of 8.8 trillion won, and would be the lowest since the 8.1 trillion won of July-September 2012.

Samsung shares traded unchanged at 1.307 million won after the announcement, versus a 0.3 percent gain in the wider market.

"Samsung's special incentive payments to employees including domestic and overseas units appear to have been much larger than the market expected; marketing costs of its mobile business might have also been larger," said Shinhan Investment analyst Kim Young-chan.

Lee, who took over Samsung Group in 1987 from his founder-father, in 1993 ordered lieutenants to "change everything except your wife and children" to transform Samsung Electronics from a mid-tier television set manufacturer into a global technology leader.

It has since overtaken Sony Corp in TVs, Nokia Oyj in mobile phones and Apple Inc in smartphones.

Lee, who turns 72 this week, set the agenda for the future in his New Year speech by stressing the need to drop a hardware-centric culture and adopt new ways of thinking to drive innovation.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.