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Samsung’s chief financial officer, Lee Sang-hoon, has denied reports that the company is cutting 10 percent of its head office staff, saying they will be relocated rather than let go.
He spoke in reference to the Korea Economic Daily’s Wednesday report that the company, which has endured seven consecutive quarters of shrinking profit, was looking to cut one-tenth of its employees.
In what Sang-hoon called a “standard relocating,” staff from accounting, human resources and public relations will be sent to marketing or sales.
In addition to a 10 percent reduction in staff, the Korean Economic Daily was also told by an unidentified source that the South Korean electronics behemoth hoped to cut its working expenses by 50 percent in 2016.
A Samsung spokesman told CNET Korea that expense cutting has been an ongoing process in the company for several years, but declined to acknowledge any specific target for this or next year.
Despite being the global smartphone leader with a market share of 21.4 percent, the phone, tablet, laptop and computer maker has suffered seven straight quarters of falling profits. Most recently, in July, Samsung posted a net profit of $5.75 trillion won ($4.9 billion) for 2015’s second quarter — down 8 percent from the same period last year.
Edison Investment Research chalks up some of the company’s recent money woes to its inaccurate demand prediction for the S6 and S6 Edge models. “The S6 Edge is meaningfully more expensive than the S6 and given that previous [curved screen] devices have not sold well, Samsung was rational in its expectation that the regular S6 would outsell the Edge four to one. Unfortunately, this was not the case as demand has been roughly one to one, leaving a shortage of the S6 Edge and inventories of the regular S6.”
While Samsung battles Apple for the top spot in the premium market, Chinese brands such as Xiaomi and Huawei continue to gain ground in the increasingly important budget smartphone segment, harming sales of Samsung’s low-end devices, such as the Z1 and Galaxy A7.
Update 8.29 p.m. AEST: Added Lee’s remarks.
