Samsung share price down, to merge two of its US divisions

Samsung Electronics Co said it will combine two of its US subsidiaries in order to boost efficiency and increase competitiveness.

The tech giant said in a statement that it will merge its Samsung Electronics America Inc, main distributor for consumer electronics in the US, with Samsung Telecommunications America LLC, its mobile division, into a single entity.

“Similar functions within both organizations will merge, while resources will be reallocated to strengthen business competitiveness in the US,” Samsung said.

The South Korean company also said that it will move its Media Solution Center, developer of software and applications, to other parts of Samsung, including the mobile division, in order to achieve faster decision-making.

The latest actions taken by Samsung are a part of a turnaround plan as the company tries to return to record earnings during recent years. As of lately Samsung has been under a lot of pressure from low-cost Chinese competitors, who have been taking away market share and profit from it.

With projections of even more severe competition next year, Samsung has shifted its focus to reducing costs and suppling the increased demand for lower-end phones.

Last week, Media Solution Center, estimated to have around 1 000 employees, parted ways with 15 of its executives in the annual reshuffle of senior management, including President Hong Won-pyo, who was appointed to head the global marketing-strategy office, a person with knowledge of the situation said. The absence of a replacement for Mr. Hong, prompted speculations that the unit would trim its workforce.

Under the reshuffle, Mr. Hong took over from Kim Seok-pil, who Samsung placed as leader of strategic marketing for the mobile business.

Samsung reported a 60% drop in profit for the third quarter compared to last year, due to lower phones sales and decreased prices. Earlier this month, the Wall Street Journal cited a person who accused mobile chief J.K. Shin, who left the company in the reshuffle, of overestimating demand for the latest Galaxy S5 smartphone, the outcome of which was an excessive number of unsold devices.

Samsung lost 2.37% on Wednesday in Seoul and closed at ₩1 317 000, marking a yea-to-date decrease of 4.10%. However, the stock has gained 9.66% in the last three months, with 35 analysts polled by the Wall Street Journal rating the stock at “buy” versus only one at “sell” at the current price. With targets at: high – ₩1 700 000, median – ₩1 490 000 and low – ₩1 050 000. The company is valued at ₩217.81 trillion.