Samsung’s Share Buyback Gambit

Paying back shareholders isn’t the only thing needed to pull the electronics giant out of crisis

When you take a financial hit like Samsung has you’re going to be hearing from a lot of angry investors, and everyone single one will want to know exactly what you’re doing about the problem. But, now that Samsung’s sharing its plan, will it be enough?

So far Samsung has announced that it is looking to add an outside director to its board, as well as intentions to accelerate a share buyback and cash rstock charteturn program for shareholders. Other plans being explored are changes to corporate structure and the possibility of listing on additional stock exchanges. These announcements appeared to appease some shareholders, but others – including the U.S.-based Elliott Management – are still not satisfied. Elliot is making calls for the company to make some drastic changes to corporate structure, significantly increase the number of outsiders with board seats, and return even more money to investors in light of the combined mess the Note 7 and washing machine recalls have created.

Of course all of this comes as Samsung is trying to puzzle out how to shore up its brand enough that spooked consumers will come back. After all, shareholders won’t be placated for long if profits are sinking. Though phones are no longer igniting and washing machines aren’t blowing their tops, Samsung’s recovery from this crisis is far from over.

Erik Bernstein
www.bernsteincrisismanagement.com

 

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