Investors Samsung put aside concerns about retirement unprecedented 2.5 million Note 7 phones, despite a loss of more than 4 million unit sales, with a value of 5000 is expected million dollars (billion dollars) of income or 5 percent of the net annual profit.
on Monday, the group’s shares rose 0.5 percent to 1.6 million won, on the first day of operation after that the recall was announced, following reports that the batteries explode. However, while analysts said the relatively early problem identification must contain the cost, damage to the long-term reputation for Samsung seems more difficult to assess.
As shareholders absorb the details of product recall, which covers all models note 7 worldwide, analysts said the financial impact is manageable for a company that has a lot of cash. Implement the process will cost billion dollars, estimated, but the company has net cash of 65 trillion won (59 billion dollars).
“Samsung held good the damage, although some say that replacing faulty phones with new company will exit the problem, “said Daniel Kim, of Macquarie. “I think the battery problem will only time.”
It’s probably time which increases the total cost, since it needs two weeks to manufacture replacement products, which may deny headstart that Samsung had about the iPhone 7 rival Apple, which will be presented next Wednesday. You can also offer an opportunity for Chinese rivals so they can gain market share. Samsung declined to confirm the costs involved.
“The exchange program is a bold move that can afford only companies with deep pockets, such as Samsung and Apple,” said Peter Yu, BNP Paribas. “But it’s unfortunate that with retirement, losing a window of opportunity opened to them by making the launch before the new iPhone”.
Samsung also put at risk short-term sales boost after posting its best quarter in two years thanks to strong sales of Galaxy phones S7. For the three months to the end of June, it estimated that operating profit rose 17.4 percent year-on-year to reach 8.1 trillion won (7 billion dollars).
Until explosions were reported batteries, the new Note 7 was praised as one of the best smartphones ever made. Its elegant curved screen and its safety function iris scanning raised hopes that sales will remain strong in the second half.
But after product recalls, Strategy Analytics predicts that are likely to Samsung sold less than 10 million phones Note 7 this year, compared with previous estimates of 14 million worldwide.
When sales losses are added to the costs for product recalls are reduced revenue smartphones Samsung this year, Strategy Analytics concluded, and fell 1.5 percent profit margin smartphones.
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