
Samsung Electronics, Pushed by Investors, Will Consider Restructuring - JumpCrisscross
http://www.nytimes.com/2016/11/28/business/international/samsung-electronics-restructuring-elliott.html?_r=0
======
bane
Part of the problem they're trying to solve is the outsized role the
electronics division is playing in the conglomerate. The entire company is
worth something like half a trillion dollars (about twice Apple), but
something like half of that is the electronics component alone (my numbers
might be a bit off, but the order of magnitude should be about right).

Because of the interlocking structure of Korean conglomerates, ill performing
companies in the conglomerate can stay propped up by the others, creating a
drag on the successful parts, while simultaneously making it harder to figure
out which parts are doing well and which are not.

There's other issues to, like family ownership being deeply tied into the
conglomerate (which should be publicly traded). This has created a "royal"
class of citizens who have a very outsized influence in society even if all
they've done was to be born and have their parents put them in charge of a
small holding company to learn the ropes. The influence peddling scandal in
Korea is also revealing how deeply intertwined and corrupt the relationship
between the government, these families and these companies are, and the net
result is that citizen investors (stock holders) aren't getting the maximum
benefit they could from a more transparent and accountable corporate
structure.

Samsung in particular has a huge role in the Korean economy, accounting for
something like 10% of the national GDP.

~~~
ksec
>The entire company is worth something like half a trillion dollars (about
twice Apple)

Um..... Apple is worth about 600B now, ( And it is heavily under value in
todays valuation ), how is half a trillion dollar; 500B worth twice as Apple?

~~~
sampple
Apple has assets of around $321.686 billion, whereas Samsung is worth around
1.64601505816 times more with assets of around $529.5 billion. Therefore Apple
is not only worth less than Samsung, but is heavily over valued.

~~~
skinnymuch
Apple has over $200B in cash alone. And does close to $40B a year in profits.
Calling them heavily overvalued when their market cap is only $600B is
ridiculous.

Talking about assets as if they are that important is so weird. How would you
rate finance companies and other sorts of companies with tons of assets. They
would be insanely undervalued according to your "analysis"

------
w1ntermute
Korean conglomerate ( _chaebol_ ) owners utilize interlocking relationships
between companies in order to maintain control despite having only a minority
ownership[0,1]. This can cause lots of corporate governance issues, such as
when family disputes end up affecting companies[2].

0:
[http://www.esadegeo.com/download/PR_PositionPapers/43/ficPDF...](http://www.esadegeo.com/download/PR_PositionPapers/43/ficPDF_ENG/201309%20Chaebols_Murillo_Sung_EN.pdf)

1: [http://onlinelibrary.wiley.com.sci-
hub.cc/doi/10.1111/1467-8...](http://onlinelibrary.wiley.com.sci-
hub.cc/doi/10.1111/1467-8683.00014/full)

2: [http://www.bloomberg.com/news/articles/2016-09-29/death-
prob...](http://www.bloomberg.com/news/articles/2016-09-29/death-probes-
family-feud-a-look-back-at-lotte-group-s-crisis)

~~~
Animats
Look at the Hanjin mess. The chaebol decided not to bail out the shipping
business unit, which is now bankrupt and shutting down. (Today was the last
day to claim your container and make arrangements to move it if it's stuck on
a Hanjin ship.)

But Samsung isn't in serious trouble. It's just not paying out enough to
investors.

------
sangnoir
Without commenting on the corporate governance side of things, being
vertically integrated at Samsung's scale has a lot of advantages - boosting
the profitability of the phone division at the 'expense' of the battery and
display divisions probably unlocks more "shareholder value" in the long term
than having the individual divisions finding their local profit maxima as
separately listed companies.

It makes sense for the high-margin divisions to 'subsidise' the low-margin-
but-strategic divisions. It also makes sense from a vision perspective - "here
is the ideal phone we would like to sell in 10 years, all divisions, do the
necessary R&D to make it happen"

------
MagicMouseTrap
This is way too reminiscent of the 3-Envelopes story.

