Makeover plan boosts recall-hit Samsung

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Shares in Samsung Electronics have jumped to a record high after activist investor Elliott Management submitted unsolicited proposals for a radical corporate makeover at the world’s biggest smartphone maker. But, as Sonia Legg reports, the news came as the tech giant faces fresh claims of problems with its flagship Galaxy Note 7 smartphone.

Makeover plan boosts recall-hit Samsung

It can’t be bad when a company in the midst of a massive product recall sees its shares soar to a record high.

And Samsung has a U.S. hedge fund to thank for the 5 per cent boost.

Elliott Management has submitted unsolicited proposals for a radical corporate makeover.

It’s not the first they’ve tried to change South Korea’s biggest conglomerate – an attempt last year failed.

But this time Samsung is dealing with an overheating flagship smartphone.

(SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING:

“The actual cost of having to recall a certain product should be manageable, the more unknown costs are those that affect brand and trust and confidence in the company going forward, which clearly could impact their sales.”

Samsung’s recall of its Galaxy Note 7 is well underway.

But an American customer has put a spanner in the works.

He says his replacement smartphone started smoking while he was on a plane.

A new investigation is underway.

But if comparisons are made with Toyota, VW and Britain’s Tesco – Samsung should be ok.

(SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING:

“Yes there is risk there, but going by the evidence of those other corporates and the very strong consumer base and product base that Samsung has had for a number of years it’s quite possible that this scandal will be averted,”

Elliott, founded by billionaire Paul Singer, already owns a half a percent share of Samsung.

It wants to split the family firm in two and is proposing a $27 billion dividend from Samsung’s $70 billion cash pile.

Investors liked the sound of that and the prospect of a new acquisition.

Samsung’s taking over Viv Labs – a U.S. firm run by a co-creator of Apple’s Siri.

It wants a voice assistant programme for its home appliances and other wearable technology.

Tags : Viv labs, Viv labsapple, Smartphones, Siri, shares, samsung, record, recall, Note 7, management, high, Hedge, Galaxy, fund, Elliott, apple

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