Samsung’s plan comes amid mounting pressure for the tech giant to return more capital to shareholders as it heads for its worst annual profit in three years
South Korea’s Samsung Electronics Co Ltd had a major announcement to make after investors had been calling for higher returns to serve as the backdrop for the continuously declining profits. The Galaxy maker announced that it was going to have a $2 billion share buyback plan which is going to be its first since 2007. The company has been planning to buy back 1.65 million common shares and 250,000 preferred shares in order to stabilize the share price and boost value for shareholders. This buyback, which is going to be its second-largest buyback ever, was announced in a regulatory filing.
Enhancing shareholder value is a common phenomenon and buybacks are typically the best strategies. This one comes as a latest buyback strategy by a Korean company and this has come after Hyundai Motor Co and affiliate Kia Motors Corp also announced their buyback plans for the same reason as Samsung’s.
No matter how glittery things appear to be on the outside, the company’s profits are simply dying on the inside and with and as it is approaching its worst annual profit in three years, it is tremendously being pressurized to return as much capital back to the shareholders as it possibly can manage. After a year of falling profits, the shareholders will finally be getting some good news.