Samsung Note 7 recall could cost billions
Samsung’s worst-ever recall could cost the company as much as $17 billion after it halted sales of its flagship Galaxy Note 7 for a second time,.
Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire. Today the outfit told mobile carriers to stop sales or exchange of the $882 device and asked users to shut off their phones while it investigated new reports of fires in replacement Note 7s.
Now the outfit faces a probe by US safety regulators, some investors and analysts predict Samsung may scrap the Note 7 and move on to successor models to limit the financial and reputational damage.
This will presumably happen before the regulators rush in and ban the phone from sale.
If Samsung stops selling the Note 7s, that will translate into lost sales of up to 19 million phones, or nearly $17 billion, that the firm was expected to generate during the Note 7’s product cycle,.
That’s a big increase from $5 billion in missed sales and recall costs analysts initially expected Samsung to incur under the assumption that the firm would resume global Note 7 sales in the fourth quarter.
By the time it fixes 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, so it is pretty pointless.
It is still not clear what the problem was with the phone.