“Taking our customer’s safety as our highest priority, we have decided to halt sales and production of the Galaxy Note 7,” the South Korean smartphone maker stated.
Samsung Electronics Co. called a permanent halt to the production and sales of its hyped Galaxy Note 7, the premium smartphone whose botched product recall has severely damaged its brand.
On Monday, Samsung announced only a temporary discontinuation of the Note 7 production. The company made the announcement on the permanent cease of the handset production on Tuesday in a filing with South Korean regulators after its shares dived a hefty 8%, its steepest one-day drop in eight years, amid growing pressure after a new string of reported smartphone fires in the US.
Not only with production, but Samsung is also officially calling on carrier and retail partners to cease selling the handset while the US Consumer Product Safety Commission (CPSC) investigates the aforementioned string of incidents regarding Note 7.
In its official statement on its website, the company is requesting Note owners to switch their devices off and return them to where they bought them.
Instead of issuing another replacement plan as it did early in September, Samsung is offering a full refund for customers or a refund for a different device, together with a $25 gift certificate or other add-on for the two rounds of recalls hassles.
According to the official Safety Recall statement, “Galaxy Note7 Owners need to do one of the following:
· Exchange your current Galaxy Note7 for a Galaxy S7 or Galaxy S7 edge and replacement of any Galaxy Note7 specific accessories with a refund of the price difference between devices; or
· Contact your point of purchase to obtain a full refund.
Customers who exchange a Note7 device will also receive a $25 gift card, in-store credit, in-store accessory credit or bill credit from select carrier retail outlets.”
While it is a huge and major twist in Samsung’s tale of handsets, it doesn’t necessarily mark the end of the company. The CPSC’s investigation remains ongoing, and Samsung says that it “remains committed to working diligently” with the organization. The company still hasn’t completely gave up on the device, even as a rising list of opinions in the media have asserted that it should axe its losses on the defective phablet .
Previously on Thursday, the first reported case of a faulty replacement unit emerged, prompting a whole Southwest plane to vacate while waiting at the gate. Since this incident, a series of reports have reached the media. Leading carriers, such as AT&T, T-Mobile, Verizon and US Cellular, have declared to officially stop selling the phone until granted the permission by the CPSC.
(image from CNN)
On Monday, a statement from Samsung comprised of acknowledgement of carrier actions, stating that, “We recognize that carrier partners have stopped sales and exchanges of the Galaxy Note7 in response to reports of heat damage issues, and we respect their decision.”
As of 13:33 GMT, Samsung shares plunged deep into the red by a negative 9.42% or 70.25 points to 675.50. On the chart below, this hefty dive is evident. October 7, right before Monday’s initial decline, marks as a doji candle which hit an all-time high of 764.75. On that day, reports said that Samsung expects third-quarter profit have risen 5.6%, beating estimates, as a pickup in chip and display earnings likely offset the impact of the global Note 7 recall.
The firm won't issue full results until late October, however, and gave no details on the expense of recalling about 2.5 million Galaxy Note 7 phones after batteries caught fire. Now, how exactly did prices rise to an all-time peak?
Ironically, it was the Note 7 itself. The smartphone problems could also boost Samsung's chip business. Industry executives claimed that the sudden need for chips in 2.5 million replacement phones is aggravating already tight memory market conditions, which could push prices higher.
However, as seen on the chart, Monday’s session had Samsung shares fall on the same issues. Tuesday made its biggest decline, hitting an intra-day low of 671.96.
The Samsung chart has been plagued by bearish candles all throughout since mid-July, caused by constant conflicts and lawsuit battles with Apple Inc and of course, the fiasco with its Galaxy Note 7. The latter issue has seemingly taken its toll on the stock on its more than 9% decline. With how things are looking, it is best to say that Samsung will remain in the bearish territory for a while.
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