Samsung shares slide after company suspends Note 7 sale
Samsung shares were down 2.9 per cent in early Wednesday trade after touching a one-month low of 1.494 million won. Photograph: (Getty)
Shares of Samsung Electronics Co Ltd opened weaker on Wednesday, touching a one-month low due to concerns about the firm's prospects after it scrapped its flagship Galaxy Note 7 smartphones due to continuing safety risks.
The world's top smartphone on Tuesday said it permanently halted sales of the beleaguered flagship smartphone in what could be one of the costliest product safety failures in tech history.
Samsung announced the recall of 2.5 million Note 7s in early September following reports of the phones catching fire. The firm appeared to have the situation under control as it started replacing the phones with devices using different batteries, until the emergence of fresh reports of fires in these new phones.
Samsung shares were down 2.9 per cent in early Wednesday trade after touching a one-month low of 1.494 million won ($1,340.21), reflecting concerns about fourth-quarter earnings as well as the potential long-term impact on the firm's smartphone business.
"Damage control at Samsung will face an uphill battle to redeem the company's tarnished image owing to the dangerous and dramatic nature of the phone's failure," Frost & Sullivan analyst Vijay Michalik said.
Analysts say a permanent end to Note 7 sales could cost Samsung up to $17 billion. While the damage to Samsung's brand remains hard to quantify, negative publicity from the botched recall could boost rivals such as Apple Inc at Samsung's expense.