Samsung halted output of Note 7 smartphones as carriers stopped selling them, the latest blow in a six-week crisis triggered by a battery defect.
Samsung has temporarily suspended production of its most expensive phone, a person with direct knowledge of the matter said Monday, asking not to be identified because the decision hasn’t been made public. The move came after T-Mobile US and Telstra stopped selling Note 7s following reports of problems with devices thought to be safe. Samsung shares fell as much as 4.6 per cent in Seoul.
Phones given out as replacements and models using a different battery have been reported as overheating and catching fire, fueling concerns that Samsung hasn’t solved the problem that led to its initial recall of 2.5 million units. The Korean company has been engulfed in controversy since the device hit the market two months ago and customers began posting videos of charred and damaged handsets.
“It’s an ongoing nightmare,” said Bryan Ma, vice president of devices research for IDC. “You would have hoped that they could have gotten past this already and moved on. Clearly, it keeps coming back.”
AT&T halted sales of the device in the US over safety concerns. “Based on recent reports, we’re no longer exchanging new Note 7s at this time, pending further investigation of these reported incidents,” AT&T spokesman Fletcher Cook said in an emailed statement on Sunday.
Suwon-based Samsung said it will take immediate steps approved by the Consumer Product Safety Commission if it finds a safety issue exists.
The production suspension raises questions about Samsung’s original investigation into the battery problems. The company said the issue stemmed from one supplier, which it had stopped using.
AT&T is the third-biggest customer of the South Korean company while T-Mobile’s parent is No 4, according to estimates compiled by Bloomberg. Sprint said its exchange policy is unchanged while Verizon Communications said the phone is out of stock at its stores.
Telstra, Australia’s biggest phone company, is offering alternative phones to customers as Samsung investigates the issue.
The latest imbroglio coincides with mounting pressure from investor Paul Elliott Singer, who this month advocated a break up of the complex Samsung empire. Singer’s Elliott Management Corp – through affiliates Blake Capital and Potter Capital – proposed that Samsung separate into an operating company and a holding company, dual-list the former on a US exchange, pay shareholders a special dividend of 30 trillion Korean won and improve governance by adding three independent board members.
Mr Ma at IDC said the production halt will deal another blow to a smartphone that had won strong reviews when it first came out in August.
“They’ve invested so much in the product, which was supposed to be the product that helps turn the company around,” Ma said. “To their credit, it was doing really, really well. That’s why it’s such a shame it has developed the way it has.”
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From Europe to the Middle East, economic success brings wealth - and lifestyle diseases
A rise in obesity figures and the need for more public spending is a familiar trend in the developing world as western lifestyles are adopted.
One in five deaths around the world is now caused by bad diet, with obesity the fastest growing global risk. A high body mass index is also the top cause of metabolic diseases relating to death and disability in Kuwait, Qatar and Oman – and second on the list in Bahrain.
In Britain, heart disease, lung cancer and Alzheimer’s remain among the leading causes of death, and people there are spending more time suffering from health problems.
The UK is expected to spend $421.4 billion on healthcare by 2040, up from $239.3 billion in 2014.
And development assistance for health is talking about the financial aid given to governments to support social, environmental development of developing countries.
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How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
