What’s with Samsung Electronics Co Ltd (KRX: 005930)

Samsung Electronics Co Ltd (KRX: 005930) in this month will declare the outcome of the investigation of the factors and causes that some of its Galaxy Note 7 smartphones are catching fire. For this, the company is examining the factors which had led to one of the costliest product safety failures in tech history. After the decision to permanently halt Galaxy Note 7 sales in October 2016, Samsung has warned that its operating profit would be affected of a $5.1 billion over the three-quarters.

Moreover, Samsung has retrieved over 90 percent of fire-prone Galaxy Note 7 smartphones sold in South Korea as over 850,000 Note 7 devices have been retrieved among about 950,000 phones sold. In the United States and Europe, the retrieval rate has crossed 90 percent, and the company has already taken an action to restrict the battery capability for the protection of consumers. The company is considering the upgrade of the software patch to limit the maximum charging capability of Note 7 to 60 percent. The exchange and refunds of the fire-prone phones would continue till this month end and the benefits and favors from the replacement are scheduled to end this month only. In addition, it is critical for Samsung to find the overall cause of the fires in order to rebuild consumer trust and to avoid repeating the same mistakes.

However, in the shopping season of December in the US, the brand loyalty to Samsung Electronics was greater than last year. Overall, the sales of Apple products in the smartphone market are high in the US holiday shopping season in December, but sales of Samsung Electronics products also grew as compared to last year despite the Galaxy Note 7 incident. This shows that Samsung did not lose its market share and strong brand loyalty from customers. The consumers who wanted to buy the Galaxy Note 7 chose to buy Samsung’s other flagship smartphones despite the Galaxy Note 7 incident.

On the other hand, South Korean President Park Geun-hye held a rare press conference on the first day of the New Year and denied all allegations of their involvement in the scandal that led to impeachment. The allegations included the bribery charges to support last year’s merger of two affiliates Cheil Industries and Samsung C&T of Samsung Group. The merger is important for Samsung Electronics Vice Chairman Lee Jae-yong to inherit a management control from his father Chairman Lee Kun-hee who has been hospitalized for over two and a half years for heart attack.

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