At crisis-hit Samsung, nerves jangle as annual review looms

Wed Oct 19, 2016 4:42am EDT
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By Se Young Lee

SEOUL (Reuters) - The next few weeks are traditionally a tense time at Samsung Electronics Co (005930.KS: Quote) as executives wait to see if their work over the year is rewarded with promotion at the South Korean firm's annual performance review.

This year, that tension has been ramped up several notches as the year-end ritual comes on the heels of the debacle over Samsung's flagship Galaxy Note 7 smartphone.

The world's top smartphone maker this month pulled the plug on the near-$900 device after phones overheated and caught fire. With some replacement phones suffering the same problem, Samsung has forecast a $5.4 billion hit to its operating profits. Some analysts predict the smartphone business may post a first quarterly loss for July-September.

"Everyone's afraid to be heard even breathing," said one Samsung employee. "There will be punitive measures; someone will have to take responsibility for this."

None of the Samsung employees Reuters talked to for this article wanted to be named as they were not authorized to speak to the media.

Samsung's annual personnel decisions - a common practice in South Korea around December - is a secret more closely guarded than even details of its new products. Executives are told about any changes only at the last minute.

Samsung insiders say there is more nervousness this year than normal, and talk internally of sweeping changes, with a cull both in the executive suite and on the ground level.

"There's a lot of talk there could be major turnover in the executive ranks on the hardware side," said an insider at the mobile division. "There's also a lot of concern among the working-level employees about a major restructuring."   Continued...

The logo of Samsung Electronic is seen at its headquarters in Seoul, South Korea, July 4, 2016. REUTERS/Kim Hong-Ji/File Photo