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Korea Times: Samsung Electronics Mulls Major Executive Rejig At Mobile Division

South Korean conglomerate Samsung Electronics Co. Ltd. (SSNLF) is mulling a major rejig of its senior management executives as it continues to lose money and market share at its flagship mobile phone business, according to a report in Korea Times in Sunday. The management reshuffle is expected to begin as early as December.

The move will see the replacement of many executives who have served in Samsung Electronics' IT and mobile (IM) division for long periods. These executives will be moved to other divisions in the Samsung group based on performance evaluations.

The company is looking to replace or move nearly 6,700 employees or 30 percent of its workforce 28,000, out of the division. The division employees make up about one third of the total group's workforce.

The major chunk of the employee replacement is expected to take place at the IM division's mobile solution center (MSC). The division also encompasses the mobile business and the network business. MSC could reportedly be absorbed into the mobile business unit.

The company is July closed its video and music hub as well as announced earlier in the month that it will stop providing its e-book service, "Samsung Books," on November 28. These are part of MSC.

The Wall Street Journal reported that the rejig could see mobile division head J.K. Shin being replaced by home appliance and TV business head B.K. Yoon. Both Shin and Yoon are currently serving as Co-CEOs and are competing for the CEO position. Samsung also has a third co-CEO, Kwon Oh-hyun, who heads the components division and was until March 2013 the sole CEO.

The company had also earlier lost its long-time chairman Lee Kun-hee as he was hospitalized in May following a heart attack. His only son, Jay Lee, is expected to assume the chairman's position soon.

Operating margins for Samsung's flagship mobile devices business, which normally generates about 60 to 70 percent of the company's gross operating profits, have been waning recently due to the company's smaller presence in the high-end market where U.S. rival Apple, Inc. (AAPL) operates as well as higher marketing expenses and intense competition from Chinese players.

Samsung, the world's largest smartphone maker by shipments, has been continuing to lose market share to Apple as well as Chinese brands amid improving product quality from manufacturers such as Huawei Technologies Co Ltd., Xiaomi Corp. and Lenovo Group Ltd.

Apple is luring premium customers, while budget buyers are being lured by Chinese manufacturers with their feature packed cheap phones. Samsung's competitiveness in emerging markets is also being threatened by the rise of other low-cost smartphone makers.

The world's largest technology firm by revenue reported a net profit of 4.22 trillion won or $4.0 billion for the recent third quarter, nearly half from 8.24 trillion won in the prior-year quarter, and also lower than 6.25 trillion won in the preceding second quarter.

Operating profit for the IM division plummeted to 1.75 trillion won in the recent third quarter, from 6.75 trillion won in the year-ago quarter. Quarterly sales at the division declined 33 percent to 24.58 trillion won, with a 34 percent drop in mobiles devices on slagging sales of Galaxy smartphones and tablets, despite strong launches, amid stiff competition from Chinese brands.

Samsung shares are losing 9,000 won or 0.74% in Monday's regular trading session in Korea and is currently trading at 1,214,000 won on the Kospi on a volume of 0.12 million shares.

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