Samsung Electronics' worst-ever recall could cost the company as much as $17 billion after it halted sales of its flagship Galaxy Note 7 for a second time, spelling an almost certain end for the ill-fated premium model.
Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire and on Tuesday the crisis deepened: The company told mobile carriers to stop sales or exchange of the $882 device and asked users to shut off their phones while it investigated new reports of fires in replacement Note 7s.
As the world's top-selling smartphone company awaits results of probe by U.S. safety regulators, some investors and analysts predict Samsung may scrap the Note 7 and move on to successor models to limit the financial and reputational damage.
"In the worst case scenario, the U.S. could conclude the product is fundamentally flawed and ban sales of the device," said Song Myung-sub, an analyst at HI Investment Securities.
If Samsung stops selling the Note 7s, that will translate into lost sales of up to 19 million phones that the firm was expected to generate during the Note 7's product cycle, according to analysts.
That would equate to nearly $17 billion in lost revenue, based on a Reuters calculation of the cost of the phones.
That's a big increase from $5 billion in missed sales and recall costs analysts initially exected Samsung to incur under the assumption that the firm would resume global Note 7 sales in the fourth quarter.
Chances of that now look slim. South Korea's Hankyoreh newspaper, citing unnamed sources, said on Tuesday Samsung will likely stop Note 7 sales permanently. Samsung did not comment on the report.
"This has probably killed the Note 7 brand name," said Edward Snyder, the managing director of Charter Equity Research.
"By the time they fix the problem they have to go through recertification and requalification and by the time that happens, they're going up against the (Galaxy) S8 launch."
WIDER PROBLEM
Samsung has already temporarily halted Note 7 production, a source familiar with the matter said on Monday. That could lead to a write-down in inventory in the event Samsung has to end sales entirely.
Broker Nomura estimates Samsung may have to incur up to 1.6 trillion won of disposal costs in the fourth quarter, assuming around 4 million Note 7s have been made.
For Samsung, with a market value of $235 billion and $69 billion in cash and equivalents at the end of June, the loss of sales of one model could be absorbed.
The bigger problem will be long-term impact on its reputation and brand, analysts and experts say.
"We think the Note 7 incident may hurt demand for Samsung's other smartphone models as well," Nomura analysts said in a note, adding it may have to slash Samsung's fourth-quarter mobile division profit estimates by as much as 85 percent.
Verizon Communications Inc, the largest U.S. wireless carrier, is already considering shifting marketing away from the troubled Note 7s, a company spokesman said on Monday.
That will likely boost rival products such as the new Google Pixel and Apple Inc's new iPhone taking market share from Samsung, as most vendors launch new products ahead of the critical year-end holiday sales season.
"The (Note 7) unit is forever going to be tarnished and the danger is that the brand becomes irretrievably damaged as well," said Stephen Robb, a partner at UK law firm Weightmans.
"They need to be writing to every customer with an apology and some form of 'compensation'... It will clearly be costly for the company but the alternative is to end up going the way of Nokia and Blackberry."
Samsung also faces lawsuits, with at least two consumers taking the company to the court in the United States to claim compensation on damages stemming from the faulty smartphone.
The firm received 92 reports of batteries overheating in the United States, including 26 reports of burns and 55 reports of property damage, according to the U.S. regulator's announcement of the Sept. 15 recall.
The Note 7 woes may also roil Samsung's component business, an important and growing source of revenue, as it provides key smartphone parts such as phone screens and memory chips.
Falling Note 7-related orders could not only cut overall revenue for the component business unit, but also crimp prices of such parts, analysts said.
Reuters
Wed Oct 12 2016
![Note 7 fiasco could burn a $17 billion hole in Samsung accounts Note 7 fiasco could burn a $17 billion hole in Samsung accounts](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/http://img.astroawani.com/2016-10/81476244641_GalaxyNote.jpg)
The Note 7 woes may also roil Samsung's component business, an important and growing source of revenue, as it provides key smartphone parts such as phone screens and memory chips.
![Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/81720085306_FadillahYusof.jpg)
Kerajaan lihat semula perjanjian penjualan air kepada Singapura - Fadillah
Fadillah berkata perkara itu sudah berlaku ketika zaman pentadbiran bekas Perdana Menteri Tun Dr Mahathir Mohamad lagi.
![Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2022-07/51658407048_Cabul.jpg)
Pelancong asing ditahan disyaki cabul pekerja spa di Pulau Perhentian
Polis menahan seorang pelancong lelaki warga Maghribi kerana disyaki mencabul seorang juruterapi wanita rakyat tempatan di Pulau Perhentian.
Warga Thailand seludup diesel dihadapkan mahkamah
Seorang pemandu lori warga Thailand dihadapkan ke mahkamah atas menyeleweng 322 liter minyak diesel minggu lalu.
ADUN Rembia sertai Pas: YB Kampar minta buka riben putih
Susulan pengumuman ADUN Rembia sertai Pas dalam sidang media, YB Kampar, Chong Zhemin kemuka Peraturan Mesyuarat dan menyifatkan satu penghinaan besar buat Parlimen.
#SisiTVParlimen
#AWANInews
#SisiTVParlimen
#AWANInews
![Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/41720590984_DatukSeriMohamadH.jpg)
Malaysia, Brunei dalam proses rundingan muktamad sempadan darat negara - Mohamad
Mohamad Hasan berkata buat masa ini, kerja-kerja penandaan dan pengukuran di lapangan telah meliputi 175.96 km atau 33.3 peratus daripada keseluruhan jarak sempadan.
Kim Pan Gon undur diri kesan kepada Harimau Malaya
Apa reaksi peminat Harimau Malaya dan penganalisis sukan mengenai peletakan jawatan Kim Pan-Gon?
Masuk Pas untuk sama-sama susah dengan rakyat - ADUN Rembia
Muhamad Jailani berkata, sebelum ini beliau pernah menghantar surat kepada Lembaga Disiplin UMNO memohon untuk memecat keahliannya daripada parti Melayu itu.
![Perang berlarutan antara punca kelewatan penghantaran Black Hawk Perang berlarutan antara punca kelewatan penghantaran Black Hawk](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-04/51712121864_TBADLYZAHARIjp.jpg)
Perang berlarutan antara punca kelewatan penghantaran Black Hawk
Perkara itu dimaklumkan pihak Aerotree Defence and Services Sdn Bhd iaitu syarikat yang dipertanggungjawabkan dalam kontrak perolehan perkhidmatan sewaan helikopter berkenaan.
Keghairahan final Euro 2024 dibawakan ke restoran mamak
Kemeriahan dan keghairahan perlawanan final UEFA EURO 2024 antara Sepanyol dengan England di Berlin, Jerman dirasai di Malaysia, dibawakan oleh 'Astro BizOne Watch Party' di Restoran Hakim, Seksyen 7, Shah Alam.
![Polis kesan remaja lelaki hilang sejak enam hari lepas Polis kesan remaja lelaki hilang sejak enam hari lepas](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/61721115027_MuhammadAdiLagik.jpg)
Polis kesan remaja lelaki hilang sejak enam hari lepas
Polis sedang berusaha mengesan seorang remaja lelaki yang dilaporkan hilang oleh keluarganya di Kuala Pilah sejak enam hari lepas.
![Anda kini boleh uji iOS 18 Public Beta Anda kini boleh uji iOS 18 Public Beta](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/41721100842_iOSPublicBeta.jpg)
Anda kini boleh uji iOS 18 Public Beta
Walaupun iOS 18 Public Beta sedia dimuat turun, ia masih lagi dalam peringkat pembangunan dan ujian.
![Apple sasar permintaan iPhone 16 lebih tinggi tahun ini, selari pengenalan integrasi AI Apple sasar permintaan iPhone 16 lebih tinggi tahun ini, selari pengenalan integrasi AI](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/81719026701_tbAppleIntelligence.jpg)
Apple sasar permintaan iPhone 16 lebih tinggi tahun ini, selari pengenalan integrasi AI
Apple turut menyasarkan pendapatan tahunan 2024 yang lebih tinggi, selari pengenalan ciri kecerdasan buatan pada sistem operasi mereka.
![Peranti IoT baharu Apple untuk rumah tertiris dengan cip A18 Peranti IoT baharu Apple untuk rumah tertiris dengan cip A18](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-07/71720154048_tbAppleA.jpg)
Peranti IoT baharu Apple untuk rumah tertiris dengan cip A18
Peranti ini dikatakan akan berada dalam kategori yang sama dengan HomePod dan Apple TV iaitu aksesori untuk rumah.
![Apple dijangka mulakan pengeluaran AirPods dengan kamera inframerah menjelang 2026 Apple dijangka mulakan pengeluaran AirPods dengan kamera inframerah menjelang 2026](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2023-09/81694917770_Airpods.jpg)
Apple dijangka mulakan pengeluaran AirPods dengan kamera inframerah menjelang 2026
Mengikut laporan awal, ia dikatakan akan diintegrasikan bersama penggunaan Vision Pro sekali gus memberikan pengalaman yang lebih baik kepada pengguna ketika memakai set kepala tersebut.
![Suruhanjaya Eropah lancar siasatan ke atas App Store Suruhanjaya Eropah lancar siasatan ke atas App Store](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/61719225623_EuropeanCommission.jpg)
Suruhanjaya Eropah lancar siasatan ke atas App Store
Suruhanjaya Eropah akan meneliti amalan gergasi teknologi itu mengenakan bayaran kepada gedung aplikasi alternatif dan pembangun aplikasi setiap kali pengguna iPhone memasang perisian mereka.
![Apple, Meta bincang kerjasama penawaran kecerdasan buatan Apple, Meta bincang kerjasama penawaran kecerdasan buatan](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/81719026701_tbAppleIntelligence.jpg)
Apple, Meta bincang kerjasama penawaran kecerdasan buatan
Antara perkara yang dibincangkan adalah mengintegrasikan model kecerdasan buatan yang dibangunkan Meta terus ke sistem Apple Intelligence.
![Microsoft kembali atasi Apple, NVIDIA sebagai syarikat paling bernilai di dunia Microsoft kembali atasi Apple, NVIDIA sebagai syarikat paling bernilai di dunia](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/81719200626_Microsoft.jpg)
Microsoft kembali atasi Apple, NVIDIA sebagai syarikat paling bernilai di dunia
Microsoft berada di kedudukan teratas dengan nilai pasaran $3.343 trilion (RM 15.75 trilion), dengan Apple di tangga kedua dengan nilai $3.191 trilion, dan NVIDIA pula dengan nilai $3.113 trilion.
![Apple Store pertama di Malaysia guna tenaga lestari sepenuhnya Apple Store pertama di Malaysia guna tenaga lestari sepenuhnya](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/51718860047_AppleStore.jpg)
Apple Store pertama di Malaysia guna tenaga lestari sepenuhnya
Ia akan dibuka secara rasminya pada 22 Jun ini, sekali gus memudahkan pengguna tempatan mendapatkan pelbagai produk Apple.
![NVIDIA atasi Microsoft sebagai syarikat paling bernilai NVIDIA atasi Microsoft sebagai syarikat paling bernilai](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/51717639416_NVIDIA.jpg)
NVIDIA atasi Microsoft sebagai syarikat paling bernilai
NVIDIA, Microsoft dan Apple kekal sebagai syarikat yang mempunyai nilai pasaran melebihi $3 trilion.
![Apple fokus pembangunan iPhone 17 yang lebih nipis untuk 2025 Apple fokus pembangunan iPhone 17 yang lebih nipis untuk 2025](https://resizer-awani.eco.astro.com.my/tr:w-177,h-100,q-100,f-auto/https://img.astroawani.com/2024-06/81718597559_iPhoneApple.jpg)
Apple fokus pembangunan iPhone 17 yang lebih nipis untuk 2025
Apple dijangka memperkenalkan peranti-peranti lain yang nipis dalam tahun-tahun akan datang.