With the recent news of Samsung halting the production and sale of the now infamous Note 7, the Korean company is expected to lose $17 billion in market value and may forever tarnish the Note line and even the whole smartphone division as well. This is way above the predicted $1 Billion loss that Samsung has projected during its first announcement of recall.
The problem was undeniably way bigger
When the Note 7 fiasco started, it was limited to overheating batteries and in some cases, explosions. Conservatively, Samsung announced its recall of units affected and had determined the specific battery provider, Samsung SDI, as the main culprit.
However, in recent news of replacement units still having the same problem, the company lost its footing and was forced to stop the production and sales altogether that resulted in a massive loss of $17 Billion, Bloomberg reported. The Korean giant's shares fell to a record eight percent, its largest since 2008.
Even Samsung and Apple suppliers are affected
The impact was felt even on Samsung suppliers and its rivals. Bloomberg reported that Radiant Opto-Electronic Corp., a Taiwan based supplier of Samsung, lost seven percent in shares, a mere two points lower than what Hannstouch Solutions Inc., also a Samsung supplier, lost with nine percent decrease in shares. Meanwhile, known Apple Inc. component suppliers Japan Display Inc. and Hon Hai Precision Industry and Co. all rose to four and one percent respectively.
The end of Note 7
In a report from BGR, Edward Snyder, a managing director from Charter Equity Research said that the recent fiasco will probably kill the Note 7 brand name. "By the time they fix the problem they have to go through recertification and requalification, and by the time that happens, they're going up against the (Galaxy) S8 launch," he said.
While the Note 7 is the one in question, all of the products under the Samsung brand will be affected. Questions of how a giant company failed to check its units before launch shows an internal control problem and would somehow creep its way into the other products as well. With a loss of $17 billion, Samsung's next move to clean its image is pivotal to the company's future which for now is heading towards where Nokia had gone before.
