Life after Note 7 recall: Samsung plans for a healthy recovery
The Disastrous withdrawal of the Galaxy Note 7 that dragged third-quarter mobile earnings to their lowest in nearly eight years, following battery fires, is still center stage of the South Korean giant.
Being one of the worst product failures in tech history, Samsung is currently extending their investigations beyond batteries, as it tries to reassure customers and investors that it would get to the bottom of these events.
Galaxy Note 7’s fires caused a 96 percent operating profit plunge for the of the company’s mobile division in the third quarter, although it was not doing that bad in the share market. It was 5.2 trillion Won ($4.57 billion), and matched Samsung’s revised guidance initially estimated at 7.8 trillion Won.
While its earnings are at the bottom, Samsung looked hopeful to investors who believe that Samsung shares will continue to rise.
This year so far, Samsung’s stock went up 25 percent and closed last week at 1.57 million won per share ($1,377). At the same time, last week, Samsung was trading at 11.67 price-to-earnings ratio, a metric used by investors to value a company stock based on current share price and earnings per-share.
This low ratio makes Samsung an attractive stock. So, we don’t know how long the current trend will continue, may be Samsung is not a long-term loser after all.
The tech giant said that it now aims to boost is fourth-quarter earnings through its flagship Galaxy S7 line-up together with lower-tier budget models. Investors are expecting the third quarter to be the bottom for Samsung.
If there were no fires, the company would have shipped about 11 million units of the Galaxy Note 7, which investors say is a small fraction of total 310 million devices it ships globally.
Some of the strong considerations keeping the company afloat is the big reliance on its strong semiconductor and the OLED display technology businesses, with many smartphone makers now preferring to use Samsung’s OLEDs in their displays. There is also the proposed corporate makeover from U.S. hedge fund Elliott Management.
Investors are now expecting large management changes in response to the Note 7’s failure, particularly after electing Lee Jae-Yong to the board last week. Lee, 48, also happens to be a grandson of Samsung’s founder and has been a key player behind the scenes.
He is expected to have more accountability, a clearer mandate and play an important public role in setting future strategies for marketing new products, given the fact that they must make a good come back with the Galaxy S8. They are also trying to increase sales of the Galaxy S7 and Galaxy S7 Edge.
Samsung still does not know what caused these fires in replacement devices, but there are suggestions the battery may not be the only problem. As for Investors, what they want is a clear strategy hot to pull out of the disaster, clean the tarnished image, boost shareholder returns and continue its growth.http://www.cellwebstar.com/life-after-note-7-recall-samsung-plans-for-a-healthy-recoveryhttp://www.cellwebstar.com/wp-content/uploads/samsung-galaxy-note-7-1.jpghttp://www.cellwebstar.com/wp-content/uploads/samsung-galaxy-note-7-1-150x150.jpgPhone newsRecall,Samsung Galaxy Note 7,Samsung Galaxy S7,Samsung Galaxy S7 Edge,Samsung Galaxy S8 The Disastrous withdrawal of the Galaxy Note 7 that dragged third-quarter mobile earnings to their lowest in nearly eight years, following battery fires, is still center stage of the South Korean giant. Being one of the worst product failures in tech history, Samsung is currently extending their investigations beyond batteries,...Nigel FNigel Fadmin@cellwebstar.comAuthorCellwebstar.com