HEIR TO FIGHT FIRE

Samsung places grandson of founder on board as earnings dive on recall of defective Note 7,

SEOUL, SOUTH KOREA— Samsung Electronics is still trying to figure out why its Galaxy Note 7 smartphones were catching fire, the company said Thursday, as shareholders appointed the grandson of the company’s founder to its board.

The shift of 48-year-old vice-chairman Lee Jae-yong, chairman Lee Kun-hee’s only son, to a bigger role comes at a crucial time for Samsung, South Korea’s biggest company.

Samsung Electronics, the world’s largest maker of smartphones, memory chips and TVs, reported a sharp fall in its quarterly earnings after the unprecedented recall and discontinuation of fire-prone Galaxy Note 7 smartphones wiped out its mobile profit in the last quarter.

Investors will be keen to hear how Lee, whose grandfather founded Samsung in 1938, plans to restore Samsung’s image and win back trust after the Note 7, initially launched as Samsung’s weapon against the iPhone, was scrapped less than two months after its launch.

Samsung has taken heat for its handling of the Note 7 recall and its hasty and apparently incomplete initial investigation into what was going wrong with the premium smartphones.

Samsung’s top executive Shin Jong-kyun apologized to shareholders and customers Thursday, saying the company is looking into all possible issues to pin down why the phones were overheating.

Total net income was 4.4 trillion won ($5.1 billion Canadian), down 17 per cent from 5.3 trillion won a year earlier. Sales fell 7 per cent while operating income slumped 30 per cent, in line with the company’s guidance earlier this month.

Lee Jae-yong is thought to have been making key decisions for Samsung since a heart attack in 2014 left his father, now 74, unable to oversee the company. But he largely handled internal management and meetings with VIPs.