Samsung has posted solid profit in the first three months of the year boosted by strong demand for its memory chips.
The South Korean firm’s share price rose 2.6 percent as it also flagged up stronger future earnings on top of first-quarter operating profit of 9.9 trillion won (8.01 billion euros).
Samsung, which is the world’s top maker of memory chips, smartphones and televisions, has been going through difficult times with its boss, Jay Y. Lee, mired in a political corruption scandal and the financial hit from its fire prone Galaxy Note 7.
Counting on the S8
The mobile phone division’s profit almost halved between January and March compared to last year with no new handsets to generate meaningful sales.
It is counting on the just launched and well received flagship Galaxy S8 to make up for the Note 7 failure.
Pre-orders for the Galaxy S8 have been better than expected. Recent complaints about red-tinted screens and spotty Wi-fi connection on the S8 would not have a major impact on the bottom line, analysts said.
Samsung rejected a call from US activist hedge fund Elliott to split itself in two but accepted part of the fund’s proposals, revealing plans to cancel its existing treasury shares worth the equivalent of over 32 billion euros by 2018.
Elliott welcomed the share cancellation and said it saw “room for even more progress”. The fund had called for Samsung to adopt a holding company structure by splitting itself in two, and to pay out a 30 trillion won (24 billion euros) special dividend.
In rejecting Elliott’s call for a holding company structure, Samsung cited issues including regulatory and legal risks, and said it would not boost investor returns.
“Samsung concluded the risks and the challenging environment surrounding a change in the corporate structure would not be beneficial for enhancing shareholder value and sustaining long-term business growth,” it said in a statement.