Samsung’s fire-prone smartphones are causing a flameout for its stock
Shares of the world’s biggest smartphone maker plunged 7% Monday after the company told owners of its high-end Galaxy Note 7 phone to stop using the devices over concerns they can burst into flames while charging.
The cascade of negative headlines has deepened investors’ worries about how badly the Note 7 debacle could hurt Samsung’s reputation. The company has already lost a great opportunity to get ahead of its big rival Apple (AAPL, Tech30), which unveiled the iPhone 7 last week.
Samsung said 10 days agao that it was halting sales of the Note 7 and recalling about 2.5 million of the devices around the globe. The warnings to stop using the phones on planes and elsewhere came at the end of last week.
The cost of the recall is estimated to be in the hundreds of millions of dollars, analysts say. But with more than US$25 billion wiped off the company’s market value in less than two weeks, the bigger question is how long the fallout will last. (CNN)
