- Jan 24, 2011
- 9,378
Samsung Electronics Co Ltd halted sales of its Galaxy Note 7 smartphones on Tuesday and told owners to stop using them while it investigates reports of fires, fuelling expectations the tech giant will scrap the flagship device.
Samsung is now considering permanently halting sales of its flagship smartphones as an option, a source familiar with the matter said, after fresh reports of fires in replacement devices prompted new warnings from regulators, phone carriers and airlines.
The person, who declined to be identified because they were not authorized to speak publicly on the matter, said Samsung had not yet made a final decision. A Samsung spokeswoman said nothing had been decided about future sales plans.
The world's top smartphone maker earlier said it had asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem. The company is offering to exchange Note 7s for other products or refund them.
"Consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device," the company said in statement.
Samsung's decision to pull Note 7s off the shelves for the second time in less than two months not only raises fresh doubts about the firm's quality control but could result in huge financial and reputational costs.
Analysts say a permanent end to Note 7 sales could cost Samsung up to $17 billion and tarnish its other phone products in the minds of consumers and carriers.
Investors wiped $18.8 billion off Samsung Electronics' market value on Tuesday as its shares closed down 8 percent, their biggest daily percentage decline since 2008.
The premium device launched in August was supposed to compete with Apple Inc's (AAPL.O) latest iPhone for supremacy in the smartphone market. Well received by critics, its first problem was a shortage as pre-orders overwhelmed supply.
But within days of the launch images of charred Note 7s began appearing on social media, in the first sign that something was seriously amiss with the gadget. Samsung has since recalled 2.5 million Note 7s due to faulty batteries.
"This has probably killed the Note 7 brand name - who knows if they’ll even be allowed to re-release it," said Edward Snyder, managing director of Charter Equity Research.
Read more: http://www.reuters.com/article/us-samsung-elec-smartphones-idUSKCN12A2JH
