Samsung Nominates Son Of Current Chairman To Board Amidst Company Turmoil
In the midst of a tumultuous time for the company, Samsung Electronics Co. has nominated Jay Y. Lee – son of current Chairman Kun-hee Lee – to the company's board of directors.
The decision by the board comes more than two years after Kun-hee Lee was hospitalized following a heart attack in May 2014. The chairman has remained hospitalized and reportedly incapacitated since then.
Jay Y. Lee, now co-vice chairman, will have his nomination voted on during the same upcoming shareholder meeting that the company called to vote on a $1.05 billion deal to sell its printer business to HP Inc., which it also announced today.
Following the vote, scheduled for October, Jay is positioned to be formally elevated to the nine-person board. Sang-Hoon Lee, the current CFO and president of the board, will step down from his position on the board but retain his position as CFO of the company.
According to a Samsung statement, the board believes that following his father’s two years of illness, "the time is now right" to appoint Jay, 48, to the board, allowing the heir apparent to begin taking a more active roll in the company.
"The time," however, is a rough one for the Korean vendor, with its stock plummeting Friday in its steepest one-day decline since 2008 in the wake of a voluntary global phone recall of its Galaxy Note 7 smartphones.
The recall, which the company launched September 2, followed numerous reports that the devices had caught fire while charging. On Thursday the U.S. Federal Aviation Administration issued a warning against using or charging Galaxy Note 7 devices while onboard aircraft.
Paul Troisi, Chief Customer Officer at Peabody Mass.-based Troy Mobility, said he thinks that the Galaxy Note 7 malfunction was an isolated event, but that while Samsung’s other devices have done well in the enterprise space, the Galaxy Note 7 recall is going to impact the company’s bottom line.
He said he has expected that the fast-pace of competition in the mobile market would eventually lead to an issue like this.
"There has been a very fast race going on between Apple and Samsung and eventually someone is going to trip on their shoelaces. I think Samsung just tripped," he said.
Adding to the number of things the company is dealing with, Samsung also announced Monday that it plans to split off and sell its printer business to HP for $1.05 billion.
The deal will give HP the ability to accelerate its push to disrupt the copier market with a new portfolio of A3 printers and moves Samsung out of the printer business, which has been suffering its own turmoil.
The printer market declined 10.6 percent in the first quarter of 2016, year-over-year, to 23.1 million units shipped, according to an IDC report. Inkjet printer shipments experienced a decline of 11.1 percent, according to IDC, while the laser printer market dropped 10.5 percent.
Troisi said he believes that HP is one of the de-facto standards for printers in the market and is confident the sale will benefit HP even further.
However, he said he doesn’t believe the printer business deal will have a huge effect on his mobile business with Samsung. "I don't know that selling off the printer business will change the company’s focus," he said.
Triosi added that although Samsung is going through a time of significant change, he doesn’t see his business with the Korean vendor changing.
"I still think they have a decent [product] line and their devices work pretty good for enterprise [customers]," he said.