$18 billion wiped off Samsung shares in martphone debacle. No plans to resume production of high-end phone. Apple (AAPL) soars, will benefit greatly with increased iPhone 7 sales.
WASHINGTON, October 11, 2016 – Numerous sources ranging from The Wall Street Journal to the BBC News report this morning that South Korean smartphone giant Samsung has permanently ended the production of it high-end Galaxy Note 7 due to persisting reports that the devices are continuing to catch fire, with the issue now apparently showing up in replacement Note 7 phones.
In a brief statement, Samsung confirmed
“For the benefit of consumers’ safety, we have stopped sales and exchanges of the Galaxy Note 7 and have consequently decided to stop production.”
According to CNBC,
“Samsung said on Tuesday that it was asking all carrier and retail partners around the world to stop sales and exchanges of the Note 7 while it investigates the handset’s battery problems. The firm is in the middle of a global recall in which it is replacing Note 7 handsets with new ones. But there have been reports of a handful of the replacement smartphones also catching fire, with one incident taking place on a Southwest Airlines plane….
“‘It won’t be easy to resume production and sales of Note 7 even if the US Consumer Product Safety Commission announces that it was not a faulty product that caused the ignition,’ [Korean newspaper] Hankyoreh said quoting a source at Samsung.
“In response to the article, Samsung told CNBC it would ‘have more specific action plans after talks with carriers and government bodies in each country.’”
A big beneficiary of Samsung’s smartphone debacle is likely to be Apple (symbol: AAPL), whose shares are already up sharply Tuesday morning in pre-market trading after what appeared to be a breakout move to the upside in Monday action. Apple’s new iPhone 7 models have already been surprisingly well received, contradicting negative speculation by business media pundits. In fact, the company’s pricey new jet-black model is already becoming a status symbol with reports that delivery of this model is backlogged by about 6 weeks or more.
Samsung’s Galaxy Note 7, in markets a month before the iPhone 7 was announced was expected to give Apple’s new device some fierce competition on the high end. But with the apparent termination of the Note 7, industry experts are already predicting that Apple will begin to capture many of these customers, adding to the iPhone 7’s already brisk sales.Click here for reuse options!
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