Apple stock hits highest since December on Samsung Note 7 fire crisis

Mon Oct 10, 2016 3:50pm EDT
 
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By Noel Randewich

SAN FRANCISCO (Reuters) - Apple Inc's (AAPL.O: Quote) stock on Monday jumped 2.3 percent, reaching a high not seen since December, after rival Samsung Electronics Co Ltd (005930.KS: Quote) suspended production of its flagship Galaxy Note 7 smartphones following reports of fires in replacement devices.

Fires in the smartphones that were meant to replace devices that had been recalled because of their propensity to explode could be a disaster for Samsung and a potential boon to Apple.

Apple's stock was up $2.66 at $116.72 in afternoon trading and was the largest contributor to gains on the S&P 500. Earlier, Samsung's stock dipped 1.5 percent.

Samsung's ongoing problems suggested the world's largest smartphone maker has failed to fix a problem that has already damaged its brand and threatened to derail a recovery in its mobile business.

Following the reports of fire in replacement devices, Verizon Communications Inc (VZ.N: Quote), AT&T Inc (T.N: Quote) and other wireless carriers suspended sales and exchanges of Note 7s.

Best Buy Co Inc (BBY.N: Quote) will no longer sell the Note 7 and said customers could return their smartphones or exchange them for a different device.

"We believe the Note 7's ongoing issues could help market share shifts for Apple," Credit Suisse analyst Kulbinder Garcha said in a note to clients on Monday. He estimated that a 5 percent gain in high-end smartphone market share would increase Apple's earnings per share by as much as 7 percent.

Apple's stock has rallied 13 percent since mid-September on optimism about demand for the recently launched iPhone 7.   Continued...

 
A customer buys the new iPhone 7 smartphone inside an Apple Inc. store in Los Angeles, California, U.S., September 16, 2016. REUTERS/Lucy Nicholson