The financial toll on Samsung following the forced recall of millions of their latest flagship device, the Galaxy Note 7, is forcing Samsung to sell its shares in other tech firms. This is in order to raise enough cash to to offset the cost of replacing the old phones.
Several reports quote the Wall Street Journal as having insider details about the operations. The tech firms involved are
- Seagate Technology, the popular computer drive maker where Samsung is going to sell 100% of their stake; they own a 4.2% stake in the company
- Rambus Inc, a computer chip maker where they also want to sell all the share they own in Rambus. Samsung owns 4.5% of Rambus Inc.
- ASML Holding, semiconductor manufacturers based in Holland; Samsung intend to sell just half of their 2.9% of the company. Apparently, there must be something about the semiconductor equipment maker that Samsung felt it is still worthwhile to some interest in the company.
- Sharp Corp. The giant Japanese electronics maker: Samsung is selling all of their interest in Sharp Corp. They have about 0.7% stake in the company.
The raw figures show that Samsung hope to raise about $1 billion from the sales at the prevailing maket rate. That is simply an impressive figure. This is one time where having shares in blue chips company can really come in handy to help you out of a bad situation.
The bad situation of course been the recall of the Samsung Galaxy Note 7 from various markets around the world. And the $1 billion figure is just about what it would cost Samsung to effectively carry out the exercise around the world.
But that figure could rise as more and more devices from other markets are also said to be facing the same problem.
Initially, Samsung claimed Note 7 devices in China did not have the same problem of exploding batteries. But recently, there had being two reports of Note 7 catching fire in China stemming from the same battery problem.
In one of the Chinese cases, a man told Associated Press that his friend’s Note 7 which was bought about 3 weeks ago from am online shop in China, caught fire over the weekend. According to him, Samsung contacted the owner of the phone and offered to replace it, but for some reason he refused.
Samsung acted quickly in that case because they wanted to investigate and find out if their liabilities would extend to the Chinese market. If it turns out to be true, then Samsung would have to sell more shares from their various companies to meet up the bill of the recalled Chinese Smartphones.
China is the world’s biggest smartphone market by a long shot. You can expect that the money involved if Note 7 in China were to be recalled would certainly surpass the 1billion dollars they are paying for the other markets.
Meanwhile in a press statement released today, Samsung said it has started replacing the old Note 7 with news ones. The statement also informed users how to differentiate the new Note 7 from the old one:
Samsung has begun replacing the Galaxy Note7 with a battery manufacturing standard. To help users easily understand if they have a new device and use their new Galaxy Note7 with confidence, the company has introduced a Green battery icon that has been included in three specific software changes.
The new green battery icon will be visible on: 1) the Status Bar; 2) the Always On Display screen; and 3) the Power Off prompt screen, which can be accessed by long-pressing the power key.
Additionally, users can easily check if they are using the new Galaxy Note7 by looking for a square symbol on the label of the packaging box as below.”
Spending a lot of money on publicity is what Samsung needs to do to let people know about the arrival of the new Note 7. And of course, they have to do a lot of PR campaign to really clean the burnt image of the Note 7.
Consumers need to be assured that what happened to the old Note 7 was just a blip.
image credit: news.samsung.com; independent.co.uk; bgr.com; money.cnn.com