Samsung Reorgs, Puts Profits Before Innovation

Samsung Electronics, the world’s second-largest mobile phone company, the only profitable DRAM maker and the manufacturer of flat-screen televisions announced a reorganization that combines its consumer electronics businesses into one unit focused on gadgets from phones and televisions to home appliances, and a second unit that makes chips and LCD screens. The AP suggests that the departure of two key executives means the company will switch from making innovative products and instead focus on profitability.

Samsung’s semiconductor and mobile phone businesses in recent years under the direction of two key executives — Chang Hwang-gyu, dubbed “Mr. Chip” by local media, and Lee Ki-tae, known as “Mr. Phone” — focused on putting the company at the forefront of technological innovation.

I get that the consumer electronics business is one of scale, but dumping style is no way to reinvigorate the industry — especially on the consumer side. Phone sales are down, television sales are down and chip sales are way down, but profits and sex appeal don’t have to be mutually exclusive. Samsung should think Target (s tgt) not Wal-Mart (s wmt).