Samsung's investors are pressuring the company into returning more cash, the media have reported on Friday.
The South Korean tech giant is on a recovery course, earning and saving lots of money, which has prompted investors to ask the simple question: What are you going to do with all this cash?
According to a report by Korea Times, Samsung is doing quite well: its cash-equivalent assets have reached a record 62 trillion won in June this year. Ten years ago, that number was at 12 trillion.
The company's debt ratio was cut to 33 per cent during the first half of this year, down from 78 per cent in 2005. At the same time, cash borrowing fell to 4.9 per cent.
In order to stabilise the company even more and increase the value of its shares, Samsung should think about cash returns, analysts say. "We see positive moves towards more cash returns continuing," said Bernstein Research's Mark Newman in its latest report to clients.
"Samsung's annual spending on cash returns was about 2 trillion won, while it is stockpiling more than 9 trillion won in cash, annually. It is unlikely that Samsung Electronics will have a steep rise in profits. Also, it has been reluctant to spend more on facilities,“ said a senior fund manager who has invested millions in Samsung Electronics stocks.
"Investors are waiting for a clear message from management that returns to investors will be increased."
„What investors want for Samsung is that the company should pay out more in dividends," said Dongbu Securities analyst Yoo Eui-hyung.