UPDATE 2-Samsung promotes heir apparent, shares hit record

* Samsung Electronics promotes Jay Y. Lee to president

* Promotion indicates Lee primed for top role

* Samsung’s founding family tightens control over group

* Samsung Elec shares jump 4 pct to record; up 8 pct this yr

* Chairman’s daughter becomes CEO of hotel unit

(Adds comments, details)

By Miyoung Kim

SEOUL, Dec 3 (BestGrowthStock) – Samsung Electronics
promoted its chairman’s son, Jay Y. Lee, as president in a
move that tightens the founding family’s grip over the world’s
biggest memory chipmaker as it battles slower growth.

Shares in Asia’s most valuable company, with a market
capitalisation of $120 billion, ended up 4.1 percent at a
record on hopes the change may spur growth at a firm
struggling to stop Apple’s march in the smartphone
market.

But Samsung Chairman Lee Kun-hee, the country’s richest
man, may have made his biggest gamble yet by promoting his
42-year-old son, whom analysts say has yet to make his
mark on the company.
“With this management reshuffle, and the
promotion of the younger generation of the
controlling family, some clarity has been given in that
investors get a sense of where the group and affiliates
are headed,” said Kang Sun-sik, senior fund manager
at Woori Asset Management, which owns shares in Samsung
Electronics.

Almost as reclusive as his father, the younger Lee has
long been viewed as being groomed to head the Samsung Group,
founded by his grandfather in the 1930s.

However, it won’t be an easy task for Jay Lee to match the
performance of his father, who has helped Samsung overtake
Hewlett-Packard as the world’s biggest technology firm
by revenue and has reported record results each quarter this
year, often beating even the most bullish street estimates.

Samsung Electronics is 50 percent owned by foreign
investors.

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Graphics on Samsung’s structure, http://link.reuters.com/
nys38q

NEWSMAKER on Lee Kun-hee [ID:nTOE62N01A]

FACTBOX on Samsung Group [ID:TOE6B202Y]

Samsung’s third-quarter results [ID:nTOE69Q079]

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The promotion of Jay Lee, the only son of chairman Lee,
comes only a year after he was named executive vice president
to take the newly created title of Chief Operating
Officer in December last year.

“He is expected to continue to strengthen the
competitiveness of Samsung’s strategic businesses and to lay
the foundation for Samsung’s future new growth businesses,”
Samsung said in a statement.

Prior to Lee’s promotion, his father, 68, has repeatedly
said Samsung needs nimble management and young talents capable
of dealing with fast changing markets and there would be
a large-scale management reshuffle this year,
signalling he would put a new face on the 41-year-old
technology giant.

The family-run chaebol structure spearheaded South
Korea’s rise to Asia’s fourth-largest economy from the rubble
of a war in just over a generation but its debt-fueled
expansion was widely blamed for pushing the country to the
brink of national default during the Asian financial crisis in
the late 1990s.
The model also came under attack for lacking
transparency and creating slush funds, but
its fast execution and bold investment plans enabled
family-run businesses to stay ahead of the competition in the
recent financial crisis.
“Today’s announcements are aimed at leading the
way through the rapid changes of the 21st century… highlight
the intention to increase the role of young and innovative
executive leadership, while providing impetus to the new
growth businesses,” Samsung said.

Lee, who has a bachelor’s degree in East Asian history
from Seoul National University, joined Samsung in 1991 but
spent most of his time studying for an MBA from Keio
University in Japan and the doctoral programme at Harvard
Business school before becoming a senior manager a decade
later in 2001.

The elder Lee returned as Samsung chairman in March,
nearly two years after he stepped down following a legal
scandal. He was granted a presidential pardon in late 2009
over a conviction for tax evasion.

Samsung is the latest company bringing in its founding
family to the top management.

In September, LG Electronics Inc replaced its
CEO with its founding family to help turn around its
struggling mobile business. Toyota Motor named its
founding family scion Akio Toyoda as president last year to
lead it through the global crisis that slashed demand for cars.

Samsung also promoted Choi Gee-sung, chief
executive of Samsung Electronics, as vice chairman, as South
Korea’s biggest business conglomerate revived its central
office last month to tighten its grip over some 60 business
units.

Lee will continue to keep his chief operating officer
title and Choi will also stay as CEO of Samsung Electronics.
There are more than a dozen presidents at Samsung Electronics
and two vice chairmen under chairman Lee.

YOUNG GENERATION

Samsung also promoted Lee Boo-jin, daughter of Samsung
Electronics chairman Lee, as president and chief executive of
Hotel Shilla .

Shares in Hotel Shilla ended 3.4 percent higher.

“There are broader expectations about the new, young
generation that will lead the group now. And Ms. Lee in
p articular has a very strong track record of
achievement at Hotel Shilla,” said an analyst who declined to
be named.

“However Jay Y. Lee has homework to do here.”

Samsung said Lee, as COO, has strengthened the strategic
relationships with key global customers and business partners,
and solidified its leadership position in chips and displays
with preemptive business investments.

Since he finished school, Lee has been on a fast track to
power, undertaking senior roles such as chief customer officer
of Samsung Electronics and an executive title for S-LCD,
Samsung’s flat-screen joint venture with Japan’s Sony Corp
.

One of his lowest moments came in 2000, when he ran
Samsung’s Internet business during the dot com boom and the
firm incurred losses of some 20 billion won before
folding the business.
(Additional reporting by Jungyoun Park; Editing by Anshuman
Daga)

UPDATE 2-Samsung promotes heir apparent, shares hit record