Samsung suffers $22-bn loss after Galaxy Note 7 recall
Samsung has lost $22 billion in market in just two days following security concerns over its Note 7 smartphones.
Samsung shares fell about 11 per cent after last in one of its biggest ever debacle since 2008, after regulators cautioned users from charging or using in airlines.
Last week, the company has called for a recall for Note 7 smartphone. It is now believed that brand suffered, beyond estimates of $1 billion.
On the PR front, Samsung suffered heavily as it put efforts to get an edge over Apple’s iPhone before its new launch.
“Samsung’s nightmare is just getting worse and worse,” according to Bryan Ma, vice president of devices research for IDC.
There is now possibility of complete ban by airlines on all the brands of Samsung, not just Notebook. “If true, then the Note 7 could end up dragging down the rest of the portfolio,” he added.
Samsung made the recall on September 2 following reports of batteries catching fire. Reportedly, three dozen phones caught fire, as confirmed by Samsung until now.
Last Saturday, Samsung urged its customers in South Korea not to use their Note and take that to service centres. Note 7s were supposed to be available on September 19.
Suwon, a South Korean company, has sent more than 2.5 million phones before their recall. Now the U.S. Consumer Product Safety Commission and Samsung have begun plans for a total recall for all the gadgets.
Currently, all the CPSC recalls have been made voluntarily. But once the agency intervenes, it will be more helpful to customers, as US laws ban sale of recalled products.
“The uncertainty over the Note 7 recall has grown following tough reactions from the US,” stated Lee Seung Woo, working as analyst with IBK Securities Co. in Seoul.
“Samsung has to settle this situation as early as possible by replacing every Note 7 device in order to reassure customers. In the worst case scenario, Samsung may have to consider discontinuing Note 7 sales for a time,” Lee observes.
The CPSC’s decision follows the advisory from airline companies over security. The European Aviation Safety Agency has put ban on mobiles in checked luggage.