Samsung puts all its hopes in 'born again' Note 7

SEOUL — Samsung Electronics is putting all its hopes into its new Galaxy Note 7 smartphones, preparing for a TV commercial and a poster advertisement describing them as “born again” following a damaging recall after incidents in which the device’s battery caught fire.

The world’s largest smartphone maker released Thursday its new poster for the troubled model under the headline “Galaxy Note 7 is born again,” underlining its determination to calm market fears over the battery explosion scandal which led the South Korean technology giant to recall all of its 2.5 million units which were shipped globally just a month ago.

Samsung’s new poster for the ‘born again’ Galaxy Note 7

Samsung said that it will unveil the new TV commercial on Saturday when the company resumes sales of Note 7s in its domestic market. The company declined to disclose the contents of the commercial, but market watchers expect the concept will be similar to the poster.

“We appreciate customers’ continuous interests and encouragements for Galaxy Note 7,” said Samsung in a statement. “We advise you to change old phones as soon as possible.”

But there are signs that the crisis is not fully over yet. In China, customers have reported that their phones with ‘safe’ batteries are also catching fire, raising suspicions over Samsung’s safety controls. Some South Korean customers have also complained that their exchanged Note 7s tend to overheat and run out of battery quickly.

Analysts say that Samsung should be able to overcome this turbulence eventually, though it is inevitable that its third quater earnings will be hurt by the recall issue.

“We estimate that Samsung Electronics’ operating profits plunge 9.4% to 7.38 trillion won in the third quarter hit by 1 trillion won of losses from Galaxy Note 7 recall,” said Choi Do-yeon, an analyst at Kyobo Securities. “But, its low valuation will be resolved as uncertainties and concerns will be gone.”

Shares of Samsung dropped 0.13% to 1,598,000 won ($1,451.37) on Friday. They have recovered from two weeks ago when they fell to 1,465,000 won, but are still below the 1,645,000 won price in late August when the battery explosions came to light.

CW Chung, an analyst at Nomura, encouraged investors to buy Samsung shares, setting the target price at 2 million won in spite of the Note 7 recalls.

“Samsung’s earnings forecast may partially be affected in the near-term due to the Note 7 recall. Nonetheless we are still positive on the company’s mid-long term competitiveness and earnings forecast mainly due to [semi-conductor] and display competitiveness,” said Chung.

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