Sam­sung shares plunge on Note 7 sales halt

China Daily (USA) - - BUSINESS - By BLOOMBERG

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.

AFP

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.

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