Wednesday, November 28, 2007
SEOUL, South Korea —
A Samsung Electronics Co. official said Wednesday that a bribery scandal engulfing the Samsung Group conglomerate is no major cause for concern as he outlined ambitious growth plans for the technology giant."We are unfazed by all this," Chu Woo-sik, head of investor relations at Samsung Electronics told a forum of investors and analysts, assuring them that the scandal was "nothing to worry about" and that "truth will prevail."
Prosecutors this month launched a probe into allegations that Samsung Group officials kept a slush fund and bribed prosecutors, judges and lawmakers. President Roh Moo-hyun has approved the establishment of an independent counsel to look into the allegations made by former Samsung lawyer Kim Yong-chul.
Samsung, a massive conglomerate of nearly 60 companies, has consistently denied the allegations.
Chu, however, did appear to concede that the scandal was having some negative impact on the company's image, calling "worrisome" that the "whole environment is so unstable in terms of how we would operate in the future."
But he said that Samsung would do "whatever is needed to raise the competitiveness of this company."
Kim, a lawyer who worked at Samsung Group from 1997-2004, this week added details to his claims, saying the alleged slush fund totaled $215 million.
Lee Kun-hee, the chairman of Samsung Electronics, the group's flagship company, and other officials have reportedly been banned by prosecutors from traveling overseas amid the investigation.
Earlier, Chu predicted a dramatic increase in sales and profits but said the company must seek new areas of growth such as printers, sophisticated logic computer chips and other areas.
"We are also seeking opportunities in energy, bio and health and the environment," Chu said. "So we are looking to discover what's going to be the next growth engine for our company."
Chu outlined what he called a "grand scheme" of achieving by the year 2012 a 50 percent increase in sales to $150 billion with profits of $20 billion.
Samsung this year expects to record consolidated sales of $100 billion for the first time.
The Suwon, South Korea-based company is the world's largest manufacturer of computer memory chips, liquid crystal displays and flat screen televisions. It recently surpassed Motorola Inc. of the United States as the second-largest producer of mobile phones.
Chu said that after 10 years of "phenomenal growth" the company is at a crossroads.
"Certainly Samsung is at a very critical juncture in its corporate history at the moment," he said.
Samsung's profitability has suffered this year due to weak prices for its mainstay computer chips amid an industry supply glut. Its share price has slumped this year, declining 11 percent, even as the broader South Korean stock market has surged 28 percent.
Chu said, however, that the outlook next year for chips looks better, especially for NAND flash memory used in digital devices such as cameras, music players and mobile phones.
"NAND flash demand will be a lot stronger next year," he said.
Samsung also makes dynamic random access memory, or DRAM chips, used in personal computers.
Chu later said that the company is developing health products such as a bio-chip to be used in conducting health tests and imaging devices. He also said it is developing environment-related technology to be used in areas such as pollution control.
Mobile phones have been a bright spot for Samsung. Total sales through the third quarter exceeded the entire 2006 total.
David Steel, vice president for mobile telecommunications, said the company has raised its target for annual handset sales this year to 160 million from 150 million.
He also said Samsung would continue with its year-old strategy of expanding in emerging markets, where demand is increasing rapidly.
"We sell 5 mobile phones every second around the world," he said. "That's the scale of this business."
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