Sam­sung faces rough patch post-Gal­axy Note 7

Jamaica Gleaner - - SPORTS -

SAN FRAN­CISCO (TNS): N ITS short, trou­bled his­tory, Gal­axy Note 7 was the vic­tim of a re­cur­ring over­heat­ing prob­lem that Sam­sung couldn’t tamp down.

But that might be easy compared to what comes next.

The Sam­sung brand, once con­sid­ered a gold stan­dard in the tech in­dus­try, has been tar­nished. Its stock price has been bat­tered, shav­ing tens of bil­lions of dol­lars from its mar­ket value. Costs as­so­ci­ated with the ter­mi­na­tion and re­call of the ph­ablet-sized smart­phone could top US$4 bil­lion. And the pride of the South Korean com­pany, so closely in­ter­twined with its coun­try’s econ­omy and gov­ern­ment, has been badly bruised.

Its smart­phone fran­chise, the top glob­ally with a 23 per cent mar­ket share in the sec­ond quar­ter, ac­cord­ing to IDC, could haem­or­rhage sales to ri­vals such as Ap­ple, LG, Huawei Tech­nolo­gies and new en­trant Google with its Pixel phone.

“The poor response Sam­sung had getting in front of this prob­lem will have a lin­ger­ing ef­fect,” says Steve Beck, founder of New York-based man­age­ment con­sul­tancy cg42. “It could take one, maybe two, prod­uct cy­cles to re­cover. In the smart­phone mar­ket, habits can form quickly.”

The im­me­di­ate im­pact was un­der­scored last Wed­nes­day, when Sam­sung sliced its third-quar­ter op­er­at­ing profit fore­cast 33 per cent to US$4.6 bil­lion from a prior fore­cast, and low­ered its sales out­look to a range of US$40.8 bil­lion to US$42.7 bil­lion. If those re­vised re­sults hold, when Sam­sung an­nounces its re­sults it would an­nounce the

Icom­pany’s low­est op­er­at­ing in­come in two years.

“This has been a case study in how not to do a re­call,” says Mark John­son, an as­so­ciate pro­fes­sor of op­er­a­tions man­age­ment at War­wick Busi­ness School in the UK who that they be­gan to show that there were more se­ri­ous is­sues at play.”

The death of the Note 7 could also usher in sweep­ing changes among Sam­sung’s ex­ec­u­tive ranks. When the com­pany an­nounces its an­nual re­or­gan­i­sa­tion at the end of the year, changes may be afoot in the mo­bile, qual­ity-con­trol and sup­ply-chain op­er­a­tions, say John­son and in­dus­try an­a­lysts.

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