Samsung forecasts bumper profits as CEO resigns amid ‘unprecedented crisis’


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It’s a day of contrasts for Samsung.

The company forecast bumper quarterly earnings on Friday, putting it on track to post a record operating profit for the period.

Samsung (SSNLF) expects to pull in 62 trillion won ($54.9 billion) in revenue and 14.5 trillion won ($12.8 billion) in profit for the three months ending September 30, a near 300% increase in profit compared to the same period last year.

The boost was driven by strong sales from Samsung’s semiconductor business, which supplies memory chips for rival phone makers like Apple (AAPL, Tech30). Both Samsung and Apple recently released new flagship smartphones.

Related: Samsung’s Galaxy Note 8 aims to rebuild consumer trust

But Samsung did not celebrate the news for long, following up the rosy earnings guidance by announcing the resignation of a top executive.

“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company (to) start anew,” Kwon Oh-hyun, chairman of the board and CEO of Samsung Electronics, said in a statement.

It’s been a tumultuous year for the South Korean conglomerate. About a year ago, the company’s fire-prone Note 7 had to be recalled, costing the company more than $5 billion.

And its de facto leader Jay Y. Lee was found guilty of bribery and corruption charges related to a far-reaching scandal that resulted in the ouster of former South Korean President Park Geun-hye. Lee and his lawyers are appealing the court’s decision.

Related: Samsung chief gets 5-year prison term for corruption

Back at Samsung headquarters, Kwon said he will step down next March, when his term as board chairman ends.

Usually when Samsung announces management and organizational changes, they take effect immediately, according to SK Kim, an analyst with Daiwa Capital Markets.

“The news is kind of unexpected,” he said, though he added it will have no meaningful impact on Samsung’s core business or stock price.

Samsung shares slumped half a percent in Seoul Friday afternoon, likely because the earnings guidance failed to meet domestic investors’ high expectations, Kim said.

CNNMoney (Hong Kong ) First published October 13, 2017: 12:40 AM ET


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