Samsung shares plunge on Note 7 sales halt
Samsung Electronics Co halted sales of its Galaxy Note 7 smartphones and asked consumers to stop using the ones they’ve already purchased, another blow to South Korea’s largestcompany as it struggles with a crisis over exploding batteries. Shares plunged, cutting $17 billion from its market value.
Samsung has already recalled the Note 7 once and the latest move comes after customers reported that replacement phones were also catching fire. Samsungmay be forced to scrap an entire generation of Note smartphones, one of its two most important phone lines, a severe setback in its competition with rivals like Apple Inc.
The crisis has left millions of premium smartphone buyers looking for an alternative. The obvious candidate is Apple’s iPhone 7, but Google’s slick new Pixel device could get a lift, too.
Many people upgrade their phones during the Christmas shopping season, giving Apple and Google an opportunity to fill the Samsung vacuum — and making it even harder for the South Korean company to bounce back. The Pixelmay be especially appealing to Samsung users looking for another device that runs the Android operating system.
The crisis has left Samsung scrambling to figure out the cause of the battery fires and to explain how a company known for manufacturing expertise could have missed such a critical product flaw twice. Samsung originally blamed one battery supplier for the problems and switched to an alternative company, but it is now investigating the issue again.
“It must find the cause and clearly say what it will do about it,” said Yoo Jong-woo, an analyst at Korea Investment & Securities Co.
Samsung shares fell 8 percent, the largest drop since 2008. The company has growing competition for customers shopping for premium smartphones as they head into the holiday shopping season.
A woman looks at her mobile phone as she rides an escalator past an advertisement for Samsung's Galaxy Note 7 device at a Samsung store in the Gangnam district of Seoul on Tuesday.