Samsung to Increase Acquisitions as It Mulls Boosting Dividend

November 6, 2013 Leave a comment

Samsung to Increase Acquisitions as It Mulls Boosting Dividend

Samsung Electronics Co., Asia’s biggest technology company by revenue, plans to seek more international deals and is considering boosting its dividend payout to investors. The maker of Galaxy smartphones will be more aggressive in acquisitions after spending about $1 billion investing in 14 companies since 2010, Chief Financial Officer Lee Sang Hoon told a briefing in Seoul today. Those deals include Sharp Corp., Boxee Inc. and Novaled AG.The world’s biggest maker of smartphones, televisions and memory chips invited about 400 analysts and technology experts to its first briefing with top management since 2005 as it details a strategy for maintaining growth after overtaking Apple Inc. (AAPL) in smartphones. Samsung shares are headed for their first annual decline in five years amid concern a high-end phone market that is nearing saturation will curb growth even as sales of cheaper handsets increase.

“Samsung wants to communicate better with the market, the quarterly earnings announcement used to be the only channel that market observers and investors could use,” Nam Dae Jong, an analyst at Hana Daetoo Securities Co. in Seoul, said before the briefing. “The event should give a clearer outlook on the company in the longer term.”

The company is considering a dividend payout of 1 percent of its average stock price. Samsung currently trades with a dividend yield of 0.54 percent, according to data compiled by Bloomberg.

Shares (005930) of Samsung fell 0.5 percent to 1,477,000 won as of 10:34 a.m. in Seoul. The stock has dropped 2.9 percent this year and lost $26 billion of market value in June after analysts at JPMorgan Chase & Co. and Morgan Stanley lowered sales and profit estimates, citing slower shipments of its flagship Galaxy S4 smartphone.

Research Spending

Spending on research and development will rise to $14 billion by the end of this year, compared with $8 billion in 2010, Lee said today.

The company has earmarked a record 24 trillion won in capital expenditure this year and had spent about 63 percent of the total as of Sept. 30. The spending this year is larger than the market value of Sony Corp. (6758)

The company is targeting annual sales of $400 billion in 2020, Vice Chairman Kwon Oh Hyun said.

Samsung last month posted record third-quarter earnings after extending its lead in the smartphone market and benefiting from a rally in chip prices.

Wearable Devices

Full-year net income is expected to rise to 31.4 trillion won ($29.6 billion), according to the average of 29 analyst estimates compiled by Bloomberg. Sales may rise to 232.1 trillion won, according to 41 analyst estimates.

The mobile unit, responsible for about two-thirds of earnings, posted record operating profit of 6.7 trillion won in the third quarter as the company tapped demand in China and India for mid-priced handsets.

Samsung this year added the S4, released the Galaxy Gear smartwatch, introduced the first phone with a curved screen and registered designs for spectacles to challenge Google Inc. (GOOG)’s Glass in the wearable devices market. It sold about 120 million handsets in the third quarter, researcher Strategy Analytics said Oct. 29.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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