Samsung Will Ask All Global Partners to Stop Sales and Exchanges of Galaxy Note 7 while Further Investigation Takes Place – announces a press release from Samsung Electronics. The news is obviously not good as their phones keep blowing up and on top of that Paul Singer’s Elliott Management is ready to pounce – that said Samsung is not a US company and its unclear if he can force change at the company but one has to wonder when heads will roll for this fiasco of constant phones literally catching fire.
Recently analysts opined on the fiasco with different takes..
Credit Suisse:
Following numerous reports of “newly” released Galaxy Note 7s overheating and smoking, Reuters has reported that Samsung has temporarily halted Galaxy Note 7 production again as an investigation resumes. While we have been relatively conservative in thinking through any beneficial impacts to Apple from Samsung’s issue, we do believe that after multiple safety concerns around the device, the longer term brand damage should now be assessed. This adds to our view that we believe our near and long term iPhone unit estimates could prove conservative from a unit, ASP and GM perspective.
Goldman Sachs
We currently do not expect any major costs related to the Note 7 recall in 4Q16, projecting 6mn unit shipments of Note7 smartphones for the quarter. If the investigation results turn out to require a second round of recalls, however, this could potentially cause larger-than-expected damage to SEC’s smartphone business. In the case of a second recall, we believe SEC would potentially consider shortening the product life cycle of the Note 7 to minimize reputation risk, which could eventually result in much lower estimates for Note 7
shipments and impact SEC earnings for 4Q16, in our view. More importantly, a second round of Note 7 recalls might raise questions related to SEC’s earlier explanation about the source of the Note 7 recall problem stemming from issues with the battery cell. If this is the case, SEC might need to reassess its hardware design and specifications for future flagship products, potentially deteriorating its long-term brand value in our view.
Credit Suisse Asia
Risk remains as GN7 issue could have a negative impact on the upcoming and more critical GS8 launch in 1Q17. Samsung remains undervalued despite its balanced earnings, abundant FCF and balance sheet strength.
See the full press release below from Samsung Electronics on the Galaxy Note 7 recall and cessation of all sales
We are working with relevant regulatory bodies to investigate the recently reported cases involving the Galaxy Note7. Because consumers’ safety remains our top priority, Samsung will ask all carrier and retail partners globally to stop sales and exchanges of the Galaxy Note7 while the investigation is taking place.
We remain committed to working diligently with appropriate regulatory authorities to take all necessary steps to resolve the situation. Consumers with either an original Galaxy Note7 or replacement Galaxy Note7 device should power down and stop using the device and take advantage of the remedies available.
Galaxy Note 7 Sales Halted – What do you think? comment below.
