Samsung recall threatens reputation, bottom line
SEOUL: Exploding batteries and an embarrassing recall of a flagship gadget during a controversial, closely-watched leadership transition -- it's been a bad year for Samsung , and analysts warn the trouble isn't over yet.With ever-fiercer competition in the saturated smartphone market, South Korea 's biggest firm is desperate to avoid a full-blown disaster that could cost billions, hammer its reputation and taint its new leadership.Just weeks after the early roll out of the Galaxy Note 7 "phablet", the world's largest maker of smartphones was forced to recall 2.5 million units globally following complaints its battery exploded while charging."Samsung appears to have rushed fast to roll out the Note 7 with the iPhone 7 in mind... and it is paying a hefty price now," said Greg Roh, analyst at Seoul-based HMC Investment & Securities.With images of charred phones flooding social media, the unprecedented recall was a humiliation for a firm that prides itself as an icon of innovation and quality -- and the timing of the crisis could not be worse.The Note 7 was meant to underpin growth this year as Samsung struggles to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated.One bright spot this year was the flagship handset Galaxy S7 , which earned rave reviews and boosted operating profit to a two-year high in the second quarter.The Note 7 was crucial to sustaining that momentum.The recall, currently underway in 10 nations, could cost the firm $3 billion in the long run, some analysts say, while Roh warned the fallout could significantly hurt profit for months.The crisis has also shaved $15 billion off its market value since late August, when the firm's share price hit the highest point so far this year.While unconnected, Samsung said last week it had sold shares in four technology companies to free up money, in a move it said was "aimed at focusing on our core business".Samsung and its sister firms have in recent years divested from non-core operations as the parent Samsung Group sought to streamline business amid a generational power transfer in the founding Lee family.The group wants to nurture public support ahead of the controversial, closely-watched handover amid lingering questions about the leadership credentials of the Lee family's scion and an overall lack of transparency in governance.Lee Kun-Hee, the head of Samsung Electronics as well as the parent Samsung Group, has been bedridden since suffering a heart attack in 2014 with his 48-year-old son, J.Y.Lee, presumed to take over.The junior Lee, currently vice chairman of Samsung Electronics, was nominated two weeks ago as the firm's new board member, cementing his grip on power.Senior Lee is largely credited with turning the once-obscure firm into a global giant, but less is known about his son who has kept a relatively low profile while rising the ranks."J.Y.
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Samsung cancels gala with Lady Gaga amid phone recall
Exploding cellphones blew up Lady Gaga's plans to sing at Manhattan Center Thursday.Fans who had bought $4,500 tickets to the Samsung Hope for Children Gala were told the day before that it was canceled.The company is recalling 2.5 million Galaxy Note 7 phones because of the danger of exploding lithium-ion batteries.A Samsung spokeswoman said the company canceled the charity gala, set to be hosted by Bravo's Andy Cohen, "to fully focus on our current business environment.""We remain committed to honoring our charitable partners, and this year they will receive an even greater donation than planned," the rep said.
Richard Johnson
Firefighting: Samsung recall threatens reputation, bottom line
With ever fiercer competition in the saturated smartphone market, South Korea's biggest firm, Samsung is desperate to avoid a full-blown disaster that could cost billions, hammer its reputation and taint its new leadership.Just weeks after the early roll out of the Galaxy Note 7 "phablet," the world's largest maker of smartphones was forced to recall 2.5 million units globally following complaints its battery exploded while charging."Samsung appears to have rushed fast to roll out the Note 7 with the iPhone 7 in mind... and it is paying a hefty price now," said Greg Roh, analyst at Seoul-based HMC Investment & Securities.With images of charred phones flooding social media, the unprecedented recall was a humiliation for a firm that prides itself as an icon of innovation and quality - and the timing of the crisis could not be worse.
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