Samsung to double its dividend yield
The company also vowed to invest in new technology and boost marketing.
SEOUL - Samsung Electronics Co Ltd vowed to double its dividend yield, invest in new technology and boost marketing as it sought to topple Apple Inc. in the mobile devices segment and ease investor concerns over its sagging share price.
The world's leading maker of smartphones, memory chips and televisions outlined its strategy on Wednesday at a rare meeting with analysts designed to reassure investors that it is listening to complaints about low returns and poor use of capital.
But shareholders appeared unconvinced as they drove the stock 2.3 percent lower in a flat wider market. Samsung trades at seven times projected earnings, while Apple trades at a premium of 12.
"Investors had expected a bag of presents from today's meeting, but its dividend payout plan is disappointing," said Kim Sung-soo, a fund manager at LS Asset Management.
The second analyst meeting of its kind in eight years came after a string of record quarterly profits, which have fed cash pile totalling $50 billion as of September. But the bumper earnings failed to arrest a 4.7 percent slide in the share price so far this year.
Shareholder returns are at their lowest in five years, with investors getting just 5.1 percent of profit in 2012 compared with a 15.8 percent total shareholder return in 2007 when Samsung last bought back shares in the market.
He said the South Korean giant would modify its dividend strategy based on a target yield. It also flagged a more flexible approach to shareholder returns by vowing to review them every three years to ensure they reflected changes in business conditions.
Rather than specify a longer-term target dividend yield, he said the 2013 payout would be around 1 percent of the share price compared with 0.5 percent last year, a level that fuelled investors' complaints that the company was hoarding cash at their expense.
Lee said the $50 billion war chest was being prepared for "significant investment" in strategic technologies, mergers or acquisitions, suggesting the company could loosen its purse strings as it chases the next big thing in mobile technology.
Its shares are poised to post their first annual decline in five years.
EYES ON TABLETS
Faced with slowing growth in the market for its top-selling Galaxy range of high-end smartphones, Samsung said it would target the tablet segment where Apple's iPads dominate.
The mobile business brings in two-thirds of Samsung's total profit, and Shin said the $228 billion company would continue to invest heavily in marketing to create "buzz" and boost sales of its latest gadgets.
Samsung, whose smartphone market share rose to a record 35.2 percent in July-September versus Apple's 13.4 percent, remains a second player in the tablet market. It had 20.4 percent of the tablet business in the third quarter versus Apple's 29.6 percent, according to researcher IDC.
Shin said Samsung would expand its mobile "experience shops", hold more global events like the launch of its Galaxy S4 smartphone at Manhattan's iconic Radio City Music Hall in March, and try out new marketing formats such as collaboration with fashion shows.
Assuming conservatively that Samsung will keep its marketing budget stable at last year's 6.5 percent of sales, outlays are expected to increase 16 percent to a staggering $14.2 billion this year, on par with its R&D spending.
CFO Lee estimated R&D spending would be around $14 billion.