The exploding Note 7 has made it a rough ride for Samsung.
The company is slowly but steadily making its way out of the Note 7 debacle and coming out of it comparatively intact. The company had made a global recall of the Note 7 and halted the sales. Samsung has taken all steps for ensuring that the bad devices are replaced.
The company posted profits of $7 billion for its third quarter. Though this figure is a drop by 4.2% compared to other quarters, it is better than the estimated figure by analysts on Bloomberg. The figure is also a jump of 5.5% compared to the previous year. The share price of Samsung has also increased by 0.71% up to 1.704 million currently.
Note 7 Model
Samsung has been seen to recover from the trough of 2014 but the recovery was spoilt by the launch of its Note 7 model. As soon as the new Note 7 was released on August 19th, there were several videos as well as images that reported the explosion of batteries. Many charred phones were also reported online. There was a hurried press conference of the higher management officials on September 2nd in Seoul. An announcement was made to the effect that all the 2.5 million phones that were affected would be replaced in several parts of the world.
Tanking the Shares
The news of the exploding Note 7 sent the shares down, but now the stocks are rising again, as investors are banking on the S7 phone of the Korean smartphone giant. The company has recalled all the affected devices and according to analysts, this will cost the company anywhere around one or two billion dollars.
What the Recall Signifies
An important question here is what lies in store next for the company due to the massive financial damages caused by the Note 7. The reputation of the company has surely been affected, but it may not be irreparable. It all depends on the number of Samsung S8 phones that the company will be able to sell, according to the HMC analyst, Greg Roh.
The new S8 models will be launched during the beginning of the next year. According to Greg Roh, that the Note 7 has been recalled and the reaction to the new iPhone 7 and the 7 Plus has also been rather muted. Due to these two factors, customers might delay the purchase of a new phone till Samsung and Apple bring in another new flagship phone.
Samsung seems to be slowly recovering from the Note 7 debacle, at least in its domestic market. However, overseas buyers are still quite wary of making a purchase. According to Roh, the company will have to put in more money for promoting the upcoming S8 and a little less on the S7. However, if the S7 picks up in sales, it can be confidently stated that Samsung has come out of the crisis successfully and unscathed.