Thursday, October 13, 2016
The AP (10/13, Lee) reports Samsung announced an “expanded recall of Galaxy Not 7 smartphones in the U.S” on Thursday, adding replacement Note 7s to the original recall. The Consumer Product Safety Commission said there were 1.9 million handsets “subject to the expanded recall,” noting there have been 96 incidents of overheating batteries in the US, “including 23 new reports since the first recall announcement.” In an effort to “retain customers,” Samsung will give a $100 credit to any Note 7 owner who decides to “switch to another Samsung phone.” Bloomberg News (10/13, Levin, Lee, 2.49M) also reports.
The New York Times (10/12, Sang-Hun, Subscription Publication, 13.42M) reports in continuing coverage that Samsung cut its “third-quarter profit estimate by a third on Wednesday” following its decision to end production of its Galaxy Note 7. The Times notes Samsung’s revised guidance was $2.3 billion (2.6 trillion won) lower than previous estimates, a drop of about a third. The company also revised its revenue downward by 2 trillion won, to 47 trillion won.
Writing at Bloomberg Business (10/12, 2.49M), Tim Culpan says the profit adjustment is “welcome news” as it shows “executives have signaled their willingness to quickly recognize the massive scale and sope of the costs.”
Reuters (10/12) reports Smasung’s new 2016 Q3 profit estimate would fall “30 percent below its third-quarter 2015’s operating profit.” HDC Asset Management fund manager Park Jung-hoon predicts fourth quarter profits could also be cut “but it likely won’t be as large as the third quarter.” Reuters adds that Samsung’s stock price decline of 10% so far this week puts it on track for its largest “weekly decline since May 2012.” Reuters notes Park also thinks a share buyback could “mollify shareholders whose nerves have been jangled.” Reuters adds that some analysts are predictiong the company will make a push to “get the latest version of its premium S-series smartphones to market as soon as possible.”
CNN Money (10/12, Mullen, 3.7M) reports that Nomura Securities expects a total sales hit of $9.5 billion and a profit decline of $5.1 billion through the end of 2017.
USA Today (10/12, Lee, Bailey, 6.42M) reports the problem with the replacement Note 7 phones is “still unidentified,” according to South Korea’s safety agency. Oh Yu-cheon of the Korean Agency for Technology and Standards said, “The improved product does not have the same defect. That’s why we think there is a new defect.” Jackdaw Research’s Jan Dawson said the company will need “to come up with a convincing story and a set of actions that will reassure customers that when they buy an S8, it’s going to be safe” by the time it is expected to launch in late winter to minimize total fallout.