Samsung to double dividend to lift sagging stock price
07 Nov 2013
Samsung Electronics Co Ltd, the world's biggest maker of smartphones, said today it would increase its cash returns to shareholders in an effort to lift its stock price, which has lagged behind those of competitors.
In a rare meeting with analysts, the South Korean company pledged to double its dividend yield, invest in new technology and boost marketing to topple Apple Inc in the mobile sector as it sought to ease investors' concerns over its sagging share price.
Samsung signalled several other strategic adjustments, including a plan to increase acquisitions. The change of tack is aimed at responding to an innovation shift in the information technology business to software from hardware, Samsung's traditional specialty.
''Our management feels that our current price-to-earnings multiple does not fully reflect our profit growth and our leadership position in the IT industry,'' the company's chief financial officer Lee Sang-hoon said.
''Going forward, we will put more emphasis on direct shareholder returns while maintaining our strategy of growth.''
To try to make its stock more attractive, Samsung said it intends to roughly double its dividend for 2013, payable next year, to 1 per cent of the share price, pending board approval.
The world's leading maker of smartphones, memory chips and televisions outlined its strategy at the meeting with analysts in Seoul. The meet was designed to reassure investors that Samsung is listening to complaints about low returns and poor use of capital.
Samsung trades at seven times of its projected earnings; Apple trades at a premium of 12.
The second analyst meeting of its kind in eight years came after a string of record quarterly profits, which have fed a cash pile totalling $50 billion as of September without arresting a 4.7-per cent slide in the share price this year.
