Picture of Samsung's Galaxy Note 7 smartphone.

Samsung Stocks Set to Fall After Galaxy Note7 Recall

Samsung Electronics lost over $14 billion in market capitalization after its shares declined by 6.3 percent following the news that the company will recall 2.5 million of its newly released Galaxy Note 7 smartphones due to technical issues resulting in exploding batteries.

The company’s common stocks reached their lowest level in two months, closing at 1,476,000  won per share ($1321.2 per share), which wiped off the gains realized after Samsung released its flagship-intended Galaxy Note 7 model.

Chart showing the price of the Samsung's common shares between 14 July, 2016 and 08 September, 2016.
Samsung is experiencing stock decline due to their troubles with fire-prone batteries of Galaxy Note 7. Source: google.com/finance

Many experts are of opinion that the South Korean electronics manufacturer will witness further decline of their common stocks while rival products like Apple’s iPhone 7 are gaining momentum.

Samsung also decided to deinvest their printer business to HP Inc., the company that split off Hewllet-Packard, following a Board decision to create two separate companies to focus on their respective core business. HP agreed to pay $1.05 billion to acquire Samsung’s printer division while Samsung is to pour between $100 million and $300 million in equity investment into HP by the means of open-market stock purchases.

“When we became a separate company just 10 months ago, it enabled us to become nimble and focus on accelerating growth and reinventing industries. We are doing this with 3D printing and the disruption of the $12 trillion traditional manufacturing industry, and now we are going after the $55 billion copier space. The acquisition of Samsung’s printer business allows us to deliver print innovation and create entirely new business opportunities with far better efficiency, security, and economics for customers,” Dion Weisler, president and CEO of HP, said in a statement.

The deal will boost HP’s technology know-how because the company has been using subcontractors to manufacture core components of their printers for years while Samsung have developed their proprietary technology.

Samsung confirmed they will offload their entire global printer business to HP and will market printers in Korea under the brand of HP. Last year the printer business of Samsung posted revenues worth 2 trillion Korean won or nearly $1.8 billion. This sale would eventually add further pressure to Samsung’s stocks since the company is selling a profitable business that employs some 6,000 people and comprises a China-based manufacturing facility and over 50 sales offices worldwide.


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