Samsung Investors Lose $19bn To Lingering Galaxy Note 7 Woes | Independent Newspapers Limited
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Samsung Investors Lose $19bn To Lingering Galaxy Note 7 Woes

Samsung Galaxy Note 7
Posted: Oct 11, 2016 at 3:01 pm   /   by   /   comments (0)

Shareholders of Samsung Electronics, on Tuesday, continued to count their loss as $19 billion was wiped off its market value amid growing fears that the impact of spiralling safety issues with its Galaxy Note 7 smartphone could spread beyond its flagship device to the group’s other consumer products, according to FT.

There have already been some signs of contagion, with a slowdown in S7 sales this week, according to one network, which cautioned that it was too early to tell if there had been sustained damage to the Samsung brand.

Shares in the South Korean company fell 8 per cent — the biggest percentage decline since October 2008 — as analysts warned that damage from the recall fiasco was likely to hit Samsung’s reputation as well as sales in coming months. That could mean a boon to rivals such as Apple and Google, just as their new devices hit the market ahead of the crucial holiday sales season.

The South Korean company had partly shut down production on Monday as it investigated why the replacement Note 7 models had also started to catch fire. But it has now issued a regulatory statement saying it is stopping sales of the product altogether. A spokeswoman confirmed the Note 7 would be withdrawn from the market and not be reintroduced, even if it fixes the issues that have caused some models to catch fire.

The permanent withdrawal has sent shockwaves through an industry that until the weekend had praised the company’s handling of the safety issue. Its statement late on Monday, urging consumers to immediately “power down” their Note 7 models and asking all global partners to stop sales and exchanges of the phone, highlighted the severity of the problem.

However, analysts said Samsung faced an uphill battle to regain consumer confidence, as the second withdrawal of the product in two months highlighted the company’s struggle to fix the problem and had heightened criticism it was too quick to blame the safety issues on the original battery supplier.

Affiliate Samsung SDI was widely blamed for the faulty batteries that prompted the recall. For the replacement devices, Samsung switched to batteries from China-based Amperex Technology Ltd (ATL), a division of Japan’s TDK and a key Apple supplier.