Samsung mobile recovery suffers blow as Galaxy Notes 'catch fire'

Thu Sep 1, 2016 6:12am EDT
 
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By Se Young Lee

SEOUL (Reuters) - The recovery in Samsung Electronics Co Ltd's (005930.KS: Quote) mobile business suffered a blow on Thursday as reports of exploding batteries forced the firm to delay shipments of Galaxy Note 7 smartphones, and knocked $7 billion off its market value.

Investors drove the stock to two-week lows after the global smartphone leader told Reuters late on Wednesday the shipments had been delayed for quality control testing, and that shipments to South Korea's top three mobile carriers had been halted.

Faults with the new premium flagship device could deal a major blow to the South Korean giant, which was counting on the Galaxy Note 7 to maintain its strong mobile earnings momentum against Apple Inc's (AAPL.O: Quote) new iPhones expected to be unveiled next week.

"This is some major buzz-kill for Samsung, especially given all of the hard-earned excitement that products like the Note 7 have been garnering lately," IDC analyst Bryan Ma said.

"The pending Apple launch puts all the more pressure for them to contain this quickly. The timing of this couldn’t have been worse."

Samsung did not comment on what problem it was trying to address or whether other markets were affected besides South Korea.

Sister company Samsung SDI Co Ltd (006400.KS: Quote) said that while it was a supplier of Galaxy Note 7 batteries, it had received no information to suggest the batteries were faulty.

Several people posted images and videos of charred Galaxy Note 7s online and said their phones had caught on fire.   Continued...

 
A model demonstrates iris recognition function of Galaxy Note 7 new smartphone during its launching ceremony in Seoul, South Korea, August 11, 2016.  REUTERS/Kim Hong-Ji/File Photo