The batteries in Samsung’s Galaxy Note 7 are beginning to burn a hole in Samsung’s own pockets. The disaster that has been the recall of the much anticipated Note 7 smartphone due to its dangerous exploding batteries is now causing a financial reckoning.
On Sunday, the South Korean smartphone maker announced that it had unloaded shares in four companies, with total proceeds reportedly exceeding $885.85 million. This will help Samsung cover the costs of the massive global Note 7 recall (2.5 million are to be sent back) that is anticipated to set the company back over $1 billion.
Samsung sold shares in computer-drive maker Seagate Technology PLC, chip maker Rambus Inc., Dutch semiconductor-equipment maker ASML Holding NV and Japanese electronics maker Sharp Corp., the Wall Street Journal reported. Ultimately, the company notes, these sales may help Samsung narrow the scope of its work, allowing the firm to invest more resources in the most crucial aspects of its business. “[The sale] was aimed at focusing on our core business by efficiently managing the investments made in the past in line with changes in business environments,” Samsung said.
“There is no impact on the business cooperation with the relevant companies,” Samsung asserted, but it has provided no further details at this time.
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Samsung certainly has its work cut out for it in terms of regaining investors’ trust, as the recent recall has sent the company’s stock plummeting. On Friday, September 9, more than $10 billion of Samsung’s market value was lost in the immediate aftermath of the explosive battery scandal, and the following Monday, its stock value decreased by another $15.9 billion.
And that’s not the only battle Samsung is fighting at the current time — Samsung’s leadership is also looking at a few changes, as Lee Jae-yong, the son of Chairman Lee Kun-hee was nominated to the company’s board of directors on Monday. The younger Lee has acquired a growing number of responsibilities in his father’s absence (caused by a heart attack two years ago), and the Samsung Galaxy Note 7 crisis is certainly putting his abilities to the test.