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SEOUL (Reuters) – Samsung Electronics Co. Ltd.’s shares fell to their lowest level in nearly two months on Monday after the tech giant told customers to switch off and return their new Galaxy Note 7 smartphones due to fire-prone batteries.
Investors had wiped 15.9 trillion won ($14.3 billion) off the South Korean firm’s market capitalization as of 0303 GMT, as a series of warnings from regulators and airlines around the world raised fears for the future of the flagship device.
“Some said initially the Galaxy Note 7 could be the best smartphone ever, but now it’s possible the phone will go down as the worst ever,” IBK Securities analyst Lee Seung-woo said, predicting weak sales in the fourth quarter.
Samsung Electronics’ common shares were down 6.3 percent to 1,476,000 won each after touching their lowest level since July 12, and were on track for their biggest daily percentage drop in more than four years. Analysts said the recall could torpedo Galaxy Note 7 sales and have a lasting impact on the $211 billion company’s brand image, which could derail a recovery in its smartphone market share against rivals like Apple Inc.
The global smartphone leader on Saturday urged all customers to turn off their Note 7s and return them as soon as possible as part of the recall which it voluntarily initiated on Sept. 2.
Flag carrier Philippine Airlines (PAL) is prohibiting the charging and use of Samsung Galaxy Note 7 devices on board all its flights, effective immediately, the airline announced on Monday.
This directive in line with the recall order made on these products by Samsung Electronics Company Limited.
“Findings showed that the Galaxy Note 7 batteries and phone units have caught fire during charging prompting the manufacturer to recall all units sold worldwide,” PAL said in a statement.
“Safety remains a cornerstone of PAL operations and as such, the flag carrier will be ensuring full compliance on board each flight and is seeking the full cooperation of its passengers,” it added.
PAL also noted that these devices are not allowed as check-in items, but may be handcarried for as long as these are switched off at all times. However, all Samsung Galaxy Note 7 units – whether used or brand new – will not be accepted as PAL cargo shipment. (PNA)