Daily Management Review

Papers of Apple rose thanks to Samsung's failure


10/11/2016


Shares of Apple have updated yearly high after the company’s main competitor in the smartphone market, Samsung Electronics corporation, announced termination of production and sales of the flagship model Galaxy Note 7.



Kārlis Dambrāns
Kārlis Dambrāns
After start of trading on the Nasdaq on Monday, October 10, price of one Apple’s share rose by 2.3% to $ 116.73, which was the highest value since December 2015. According to results of yesterday's trading session, securities of the US corporation stopped at the $ 116,07 mark.

Angelo Zino, an analyst at S&P Capital IQ, says that problems with Galaxy Note 7 could allow Apple to further sell 14 to 15 million iPhone in the III quarter of 2016. Wall Street expects realization of an average of 60 million Apple phones for July-September, compared to 64 million phones sold in the same period last year.

"We believe that current problems with Note 7 could help Apple increase the market share", - Reuters quoted Kulbinder Garcha, an analyst at Credit Suisse. According to his estimates, a 5% rise of Apple premium smartphone’s market share will increase the company's profit from one share to 7%.

Since mid-September, papers of the Cupertino giant have grown by 13% as the market positively accepted market launch of iPhone 7.

Galaxy Note 7 debuted on 19 August, shortly before release of Apple iPhone 7. Two weeks later, information about incidents with combustible batteries forced Samsung to start recall of the flagman.

Samsung will appeal to all partners to stop sale and exchange of Galaxy Note 7 while the company is investigating cases of the device’s ignition during battery charging.

Most fire cases occurred in the United States, where the incident has been mentioned five times. South Korea, China and Taiwan also reported one case each. Some phones overheated and got inflamed even after replacement, so Samsung decided stop the production of Galaxy Note 7 to investigate the case.

The situation with flagship smartphone Galaxy Note 7 is becoming worst event in history of the Korean corporation. Another sales stop could end up with a loss of $ 17 billion for the corporation.

The Korean company is waiting for decision of the US regulator, which can permanently ban sale of Galaxy Note 7. In this case, analysts predict that Samsung would refuse the model and immediately proceed to the next generation. This step, however, will cost 19 million unsold phones to the company. Price of each device in the US is $ 882.

On Tuesday, Samsung announced complete cessation of production of Galaxy Note 7. During trading, the company's shares were falling at the fastest pace since 2008 - by 8% to 1,545,000 KRW, capitalization has shrunk by $ 17 billion, up 217.35 trillion won (about $ 195, 6 billion), according to the trading’s results. 

source: marketwatch.com






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