Samsung shares plunged on Monday after the South Korean electronics giant urged global consumers to stop using its Galaxy Note 7 smartphone due to a spate of exploding batteries that raised alarm around the world.
Stepping up its warnings, the world's largest smartphone maker on Sunday told Note 7 users worldwide to immediately turn the device off. Samsung Electronics on September 2 had announced a recall of its oversized "phablet" after faulty batteries caused some handsets to burst into flames during charging.
Since then, airlines and air safety agencies around the world have warned passengers against using them on flights. The US Consumer Product Safety Commission Friday urged Note 7 owners to stop using the device.
Shares in the firm - South Korea's largest by value - dropped 7 per cent to close at 1.46 million won (USD 1,318) on the Seoul stock market - the lowest in two months.
It was the biggest daily drop in the firm's share price so far this year and shaved about 15 trillion won off the firm's total value. "The whole situation over Samsung is becoming more serious and complicated as more state authorities around the world are advising nationals to stop using the Note 7," said Hwang Min-Sung, an analyst at Samsung Securities. The fallout from the recall - which involves 2.5 million handsets sold so far in 10 countries - may slash the firm's profit later this year by over one trillion won, he warned.
The recall - the first involving Samsung's flagship smartphone - dealt a major blow to the firm's reputation at a time when it faces a growing challenge in all market segments.
Samsung, increasingly squeezed by Apple's iPhone in the high-end market and Chinese rivals in the low-end segment, launched the Note 7 earlier than expected - ahead of the September 7 launch of the iPhone 7.
Samsung names ailing chairman’s only son Lee Jae-yong to Board
Samsung Electronics vice chairman Lee Jae-yong, the only son of its ailing chairman, was nominated on Monday to join its board of directors. The announcement comes as the South Korean company grapples with an unprecedented smartphone recall that has wiped out billions of dollars from its market value. It recalled 2.5 million Galaxy Note 7 smartphones earlier this month and urged consumers around the world to stop using the phone immediately as airlines and aviation regulators urged the same due to safety concerns. In announcing Lee’s nomination to the board, the company said in a statement that the Samsung board believes that “the time is now right.”
Rather than waiting until the shareholder meeting next year, “his appointment now will allow him to more actively participate and take formal responsibility as a board member in important decisions such as the composition of the executive management team and strategic growth initiatives including M&A deals.” The nomination signals a new era for Samsung under a third generation of its founding family.