You are here: Home » PTI Stories » National » News
Business Standard

Reputation risk outweighs cost impact of Samsung recall: Fitch

Press Trust of India  |  New Delhi 

The potential long-term brand damage to from the recall and production suspension of its Galaxy Note 7 phone is a greater threat to its credit profile than the direct financial impact, ratings agency Fitch said today.

"The immediate impact of the Note 7 incident is unlikely to be significant enough, in itself, to affect Electronics' (SEC) A+/Stable credit rating, which is supported by strong financial metrics that are in line with a higher rating," Fitch said in a statement.



Fitch believes that the benefits of Samsung's diversified product portfolio have reduced its vulnerability to this shock.

recalled 2.5 million Note 7 smartphones in September 2016 after a number of the units spontaneously burst into flames.

Faulty batteries were blamed at first and issued replacement phones that it claimed were safe.

However, the new phones suffered the same problem, and asked consumers to switch off Note 7s on October 11. All production and sales of Note 7 handsets have been stopped, and the model has been withdrawn.

"Samsung's other divisions, such as semiconductors, displays and consumer electronics, continue to record robust operating performance," Fitch said.

However, the problems with Note 7 have raised long-term uncertainty about Samsung's handset operations as the issues with the flagship model have highlighted weaknesses both in R&D capabilities and the company's capacity to efficiently remedy serious hardware defects, Fitch said.

Note 7 and other potential handset customers may now choose Apple -- Samsung's principal competitor in premium handsets -- or mid-tier companies, if damage to the and Galaxy brands is sustained, it added.

has already revised down its revenue and profit forecast for the third quarter.

"Nevertheless, Samsung's balance sheet will remain healthy, underpinned by strong liquidity and relatively low debt," it said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Reputation risk outweighs cost impact of Samsung recall: Fitch

The potential long-term brand damage to Samsung from the recall and production suspension of its Galaxy Note 7 phone is a greater threat to its credit profile than the direct financial impact, ratings agency Fitch said today. "The immediate impact of the Note 7 incident is unlikely to be significant enough, in itself, to affect Samsung Electronics' (SEC) A+/Stable credit rating, which is supported by strong financial metrics that are in line with a higher rating," Fitch said in a statement. Fitch believes that the benefits of Samsung's diversified product portfolio have reduced its vulnerability to this shock. Samsung recalled 2.5 million Note 7 smartphones in September 2016 after a number of the units spontaneously burst into flames. Faulty batteries were blamed at first and Samsung issued replacement phones that it claimed were safe. However, the new phones suffered the same problem, and Samsung asked consumers to switch off Note 7s on October 11. All production and sales of ... The potential long-term brand damage to from the recall and production suspension of its Galaxy Note 7 phone is a greater threat to its credit profile than the direct financial impact, ratings agency Fitch said today.

"The immediate impact of the Note 7 incident is unlikely to be significant enough, in itself, to affect Electronics' (SEC) A+/Stable credit rating, which is supported by strong financial metrics that are in line with a higher rating," Fitch said in a statement.

Fitch believes that the benefits of Samsung's diversified product portfolio have reduced its vulnerability to this shock.

recalled 2.5 million Note 7 smartphones in September 2016 after a number of the units spontaneously burst into flames.

Faulty batteries were blamed at first and issued replacement phones that it claimed were safe.

However, the new phones suffered the same problem, and asked consumers to switch off Note 7s on October 11. All production and sales of Note 7 handsets have been stopped, and the model has been withdrawn.

"Samsung's other divisions, such as semiconductors, displays and consumer electronics, continue to record robust operating performance," Fitch said.

However, the problems with Note 7 have raised long-term uncertainty about Samsung's handset operations as the issues with the flagship model have highlighted weaknesses both in R&D capabilities and the company's capacity to efficiently remedy serious hardware defects, Fitch said.

Note 7 and other potential handset customers may now choose Apple -- Samsung's principal competitor in premium handsets -- or mid-tier companies, if damage to the and Galaxy brands is sustained, it added.

has already revised down its revenue and profit forecast for the third quarter.

"Nevertheless, Samsung's balance sheet will remain healthy, underpinned by strong liquidity and relatively low debt," it said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Reputation risk outweighs cost impact of Samsung recall: Fitch

The potential long-term brand damage to from the recall and production suspension of its Galaxy Note 7 phone is a greater threat to its credit profile than the direct financial impact, ratings agency Fitch said today.

"The immediate impact of the Note 7 incident is unlikely to be significant enough, in itself, to affect Electronics' (SEC) A+/Stable credit rating, which is supported by strong financial metrics that are in line with a higher rating," Fitch said in a statement.

Fitch believes that the benefits of Samsung's diversified product portfolio have reduced its vulnerability to this shock.

recalled 2.5 million Note 7 smartphones in September 2016 after a number of the units spontaneously burst into flames.

Faulty batteries were blamed at first and issued replacement phones that it claimed were safe.

However, the new phones suffered the same problem, and asked consumers to switch off Note 7s on October 11. All production and sales of Note 7 handsets have been stopped, and the model has been withdrawn.

"Samsung's other divisions, such as semiconductors, displays and consumer electronics, continue to record robust operating performance," Fitch said.

However, the problems with Note 7 have raised long-term uncertainty about Samsung's handset operations as the issues with the flagship model have highlighted weaknesses both in R&D capabilities and the company's capacity to efficiently remedy serious hardware defects, Fitch said.

Note 7 and other potential handset customers may now choose Apple -- Samsung's principal competitor in premium handsets -- or mid-tier companies, if damage to the and Galaxy brands is sustained, it added.

has already revised down its revenue and profit forecast for the third quarter.

"Nevertheless, Samsung's balance sheet will remain healthy, underpinned by strong liquidity and relatively low debt," it said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard