Samsung faces US$5 billion revenue bill

An employee poses for photographs with Samsung Electronics' Galaxy Note 7 new smartphone at its store in Seoul, South Korea, September 2, 2016.  REUTERS/Kim Hong-Ji/File PhotoAn employee poses for photographs with Samsung Electronics' Galaxy Note 7 new smartphone at its store in Seoul, South Korea, September 2, 2016. REUTERS/Kim Hong-Ji/File Photo

The world’s top smartphone maker said  it would exchange all Note 7 phones in all 10 markets including South Korea and the United States, a costly setback for a company that may cost the company over billions of US Dollars.

According to Koh Dong-jin, head of Samsung’s smartphone business:

“We are asking users to power down their Galaxy Note 7s and exchange them as soon as possible.”

Some analysts say the recall could cost Samsung nearly US$5 billion in revenue, after accounting for expenses from the recall process. An estimate aptly surmised by Jahan Rasty the chief executive officer of Real-World Forensic Engineering:

“The cost of the recall is going to be astronomical. They will have to compensate people, fix the problem and give them a revised version of the product that doesn’t have the same manufacturing or design defect. The longer this story lingers, the more it will etch itself in people’s minds.”

Some 2.5 million of the premium devices have been sold worldwide, according to the company. Reports that the phones’ batteries have combusted while charging  prompted the US Consumer Product Safety Commission to stop using the Note 7 device.

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