Samsung shares rally despite Galaxy Note 7 recall

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Samsung Galaxy Note 7 recall shares
People are silhouetted as they pose with mobile devices in front of a screen projected with a Samsung logo, in this picture illustration taken in Zenica October 29, 2014. Reuters/Dado Ruvic

Shares of Samsung Electronics recovered Tuesday despite the global recall of the South Korean tech firm’s flagship Galaxy Note 7 after the smartphone maker sold its printer unit.

Samsung sold its printer business to American computer maker HP for US$1.05 billion (AU$1.4 billion) Monday. Samsung shares ended up 4.23 percent at 1.527 won Tuesday as traders welcomed the news.

According to Lee Seung-Woo, an analyst at IBK Investment Securities in Seoul, the sale is a very timely decision to boost Samsung’s stock value.

"The printing business was never a plus factor to Samsung's market value due to its slumping sales and low profit.

"The latest sale is a positive and timely decision for boosting stock value.”

Samsung shed at least US$22 billion (AU$29.4 billion) last week due to the recall of Galaxy Note 7 smartphones across the globe. Samsung shares fell 11 percent Friday, days after the South Korean firm announced the global recall of the new Android smartphone due to exploding batteries.

“The uncertainty over the Note 7 recall has grown following the tough reactions from the U.S.,” Lee added.

“Samsung has to settle this situation as early as possible by replacing every Note 7 device in order to reassure customers. In the worst case scenario, Samsung may have to consider discontinuing Note 7 sales for a time.”

At least 2.5 million units of Galaxy Note 7 were reportedly shipped worldwide before the Sept. 2 recall. Samsung has advised Galaxy Note 7 owners to stop using the device, power it off and return to the retail stores. (Read: Samsung Australia offers courtesy phones to Galaxy Note 7 owners starting Sep. 7)

Samsung are giving Galaxy Note 7 owners with the option to get a replacement unit or refund the price of the new device. The supply of Galaxy Note 7 devices with new batters are due to ship on Sep. 19. In Australia, Samsung offers courtesy phones to customers awaiting the delivery of the new Galaxy Note 7 smartphones.

Samsung’s fiasco over exploding Galaxy Note 7 smartphones came just a week before Apple launched its flagship iPhone 7 and iPhone 7 Plus devices. (Read: iPhone 7, iPhone 7 Plus release date in Australia: Pre-order starts Friday, retail sale follows on Sep. 16)

Samsung’s Galaxy Note 7 is considered as the first smartphone that employs iris-scanning cameras for additional biometric security. Equipped with 64GB internal storage, Samsung Galaxy Note 7 comes with an S Pen stylus, a 12-megapixel f/1.7 dual pixel rear camera and a 5-megapixel front camera. The water-resistant handset also uses scratch- and shatter-resistant Gorilla Glass 5 and runs on 6.0.1 Marshmallow version of Android.

Galaxy Note 7 boasts of a 3500mAh battery, which is the root cause of the global recall. Roughly 65 percent of the batteries of the latest Samsung flagship phone were manufactured by Samsung SDI Co., a sister company of Seoul-based smartphone maker. The remaining 35 percent were made by Hong-Kong based Amperex Technology Ltd.