Samsung shares saw their biggest two-day slide in eight years as the company continued to suffer fallout from the worldwide recall of its Galaxy Note 7.
The South Korean electronics giant said earlier this month that it had stopped sales of the high-end device and would voluntarily replace phones with new models “over the coming weeks” following dozens of reports of batteries catching fire or exploding during charging. Samsung shares plunged 7 percent Monday, knocking nearly $16 billion from the company’s market capital after more than $10 billion was wiped out Friday.
“Our number one priority is the safety of our customers. We are asking users to power down their Galaxy Note7s and exchange them as soon as possible,” DJ Koh, president of Samsung’s Mobile Communications Business, said in a press release issued Saturday. “We are expediting replacement devices so that they can be provided through the exchange program as conveniently as possible and in compliance with related regulations. We sincerely thank our customers for their understanding and patience.”
Analysts said Samsung’s plummeting stock was also affected by concerns over a possible U.S. interest-rate hike as well as declines in U.S. stocks last week, The Wall Street Journal reported. The company reportedly could lose $5 billion in revenue after accounting for the cost of recalling the 2.5 million devices that must be replaced.
The recall comes at a particularly bad time for Samsung, which remains the top smartphone vendor in the world. The release of the Galaxy Note 7 follows the spring launch of the Galaxy S7 Edge, which was the top-selling Android phone in the world during the first half of 2016. Indeed, Samsung made the three best-selling Android devices during the first six months of 2016: The S7 Edge shipped 13.3 million units, the Galaxy J2 shipped 13 million units, and 11.8 million Galaxy S7 handsets were shipped.
The Galaxy Note 7 was positioned to compete at the top end of the smartphone market against the iPhone 7, which Apple introduced last week and which will come to market in the U.S. later this week. Sales of the new iPhone are sure to be boosted in the coming weeks as Samsung struggles to recover from problems with its latest flagship phone.
Meanwhile, Samsung nominated the son of its longtime chairman to its board of directors. Lee Jae-yong joined the board more than two years after his father, Chairman Lee Kun-hee, was hospitalized following a heart attack; Kun-hee remains incapacitated.
Samsung also said it will sell its printer business to HP for $1.05 billion. As part of the deal, Samsung agreed to make an equity investment of $100 million to $300 million in HP through open-market stock purchases.
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