Samsung permanently discontinues the Galaxy Note7

Samsung permanently discontinues the Galaxy Note7

>Company had already recalled 2.5 million Note 7 phones

>Regulators, carriers had pressed Samsung to halt sales

Samsung Electronics Co. is ending production of its problematic Galaxy Note 7 smartphones, taking the drastic step of killing off a device that became a major headache for South Korea’s largest company.

Samsung had already recalled the Note 7 once last month after early models exploded and the latest move comes after customers reported that replacement phones were also catching fire. 

The crisis has left Samsung scrambling to figure out the cause of the battery fires and to explain how a company known for manufacturing expertise could have missed such a critical product flaw twice. 

Samsung Electronics shares fell 8 percent in Seoul Tuesday, wiping out about $17 billion of market value, before the Note 7 termination was announced. The stock dropped further in London trading after the news, sliding as much as 9.9 percent.

amsung hasn’t said who, if anyone, will be held responsible for the Note 7 missteps. The phone unit is run by D.J. Koh, who took over in December.

Samsung had asked for a halt to Note 7 sales earlier on Tuesday under pressure from regulators and wireless operators that sell its phones. Consumers had reported problems with supposedly safe phones in the U.S. and China, and carriers such as AT&T Inc.

The U.S. Consumer Product Safety Commission warned users not to use the Note 7 due to concerns over more incidents of overheating. The Korea Agency for Technology and Standards also asked Samsung to stop selling or exchanging the Note 7 after the regulator confirmed possible defects in the new phones.

The debacle may lead to management changes at the Samsung conglomerate. The group typically shuffles executives at the end of the year, especially if there are losses or other problems.

source:bloomberg.com