One month ahead of its actual release date, Samsung Electronics has decided to launch the new Samsung Galaxy Note 7 prematurely on August 19 in the US and Australia, backed with an aggressive marketing campaign. It is possible that Samsung did this to beat its biggest rival Apple which is expected to release its iPhone 7 this month. Samsung also did this to local rival LG Electronics, overshadowing the launch of the G5 smartphone this year by releasing its Galaxy S7 on March.
Now many are questioning if they missed Galaxy Note 6. They didn’t. Samsung named their latest phablet as Note 7 to emphasize its vast difference from Note 5. These differences include a massive 4200 mAh battery, 6GB RAM, Snapdragon Qualcomm Octa-core 3.3 GHz processor, 9 and 32 megapixels front and back cameras, more refined camera features, wireless rapid charging plus, Corning Gorilla Glass 5, Android 7.0 OS, and its improved S Pen.
Chink in Note 7’s Metal Uni-body Armor
Mentioned above are some impressive specs, but two weeks after the release of Samsung’s premium phone, reports came in that some devices’ batteries are fire-prone and caught fire while charging. Following these complaints, Samsung halted their sales in 10 markets, denting a revival of the firm’s mobile business.
The world’s biggest smartphone vendor immediately announced a recall of all affected devices, those already in the customers’ hands, retailer inventories and units in transit. This might mean a delay of release to countries that hasn’t launched the phone yet, like the UK.
Head of the South Korean company’s smartphone business, Koh Dong-jin didn’t comment on how many devices are affected exactly, but they have already sold 2.5 million of the phablet so far. According to International Business Times, 51,060 Note 7 smartphones in Australia is being recalled.
Koh expressed regret over the recall at a news conference on Friday. It affected markets in South Korea and the United States, but not in China as models in the country has different batteries and are not being recalled. These batteries are made by Chinese battery maker ATL, and it is in 30% of the Note 7s. 70% of the units have batteries from Samsung SDI, which is what Samsung is recalling.
Owners of the units being recalled need not to worry, as Samsung said that they would provide temporary phones while their Note 7s are being replaced.
(Chart from Yahoo! Finance)
Samsung’s Finances and Stocks
Samsung’s mobile division accounted for about 54% of the firm’s January-June operating profit of 14.8 trillion won, and this might just lower because of this incident. According to Credit Suisse, a recall or shipment delays could wipe 1.5 trillion won from Samsung’s 2016 operating profit of estimated 30.2 trillion won in an absolute worst case scenario. On the other hand, according to Lee Seung-hyuck, an analyst at Korea Investment & Securities said that for the global recall of 2.5 million units, Samsung SDI is expected to bear the expense for most of the battery parts. Its operating loss may stand at around 18 billion won in the third quarter.
On Monday, after Friday’s reports, Samsung SDI’s share went down 1.38% from Friday’s high of 109,000 KRW to Monday’s high of 107,500 KRW. This is considerably lower than the August high of 124,000 KRW which is Samsung’s highest since the release of Note 7. This looked to be more like a correction, however, as the shares immediately rose on Tuesday after Samsung’s immediate response to the problem. Investors’ confidence are gained once again as it traded from 109,000 KRW highs to 160,000 KRW lows. Shares’ 50-day SMA is higher than its 100-day SMA, promising a continuous rise.
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