Samsung Electronics Co LTD vowed to recover from the recent disastrous withdrawal of its Galaxy Note 7 that dragged their earnings to the lowest level in nearly eight years.
The technology giant has released statements about expanding its investigation about Note 7’s exploding battery and assured its investors they would get to the bottom of one of the worst technological failure in history.
Co-Chief Executive J.K. Shin said at a general meeting in Seoul, “We know we must work hard to earn back your trust and we are committed to doing just that.”
Investors voted on Thursday to make Samsung Group’s de facto chief, Jay Y. Lee, as Samsung Electronics director in response to the Note 7 battery failure.
Jay Lee, son of the infamous Lee Kun-hee will now play a bigger role at the group’s flagship company. He also plays a public role in setting strategy.
Chief Executive Kwon Oh-hyun said at the shareholder meeting that they would assign a new role only after the investigation is finished.
Samsung, the world’s top smartphone maker plunged 96% in their third-quarter earnings, a loss of almost 100 billion won ($87.63 million). This is their lowest level since 2008.
The mass pull out of Galaxy Note 7 resulted to -0.1% to -0.2% points from South Korea’s third-quarter GDP growth in quarterly terms, a finance ministry official told Reuters on Tuesday.
The company blames Samsung SDI Co Ltd, who supplied batteries for the first Note 7 recall. The subsidiary reported an 110 billion won operations loss for the third quarter.
Apple Inc, Samsung’s main rival aimed to achieve a fourth-quarter profit close to October-December of 2015, on the back of sales of Galaxy S7 phones and lower-tier models.
“Looking ahead to the fourth quarter, the company expects earnings to improve (from a year earlier) driven by strong performance in the components business,” Samsung said in a statement.
Samsung sees another $3.1 billion hit to profit with the Note 7 withdrawal through the first quarter of 2017.
Software issues may also exist
The company is still investigating what caused the Note 7 fire. This is because replacements for the initial 2.5 million Note 7’s it recalled was due to fire-prone batteries.
Co-CEO Shin said the battery might not be the only problem. Consequently, they are now looking into software issues to determine the root cause.
Rattled investors now want a concrete plan on how to revive the company’s earnings, repair its major brand, and boost shareholder returns.
LS Asset Management fund manager Kim Sung-soo said, “The key is whether Samsung will be able to remove the uncertainty surrounding the Note 7 and maintain its leading position in the smartphone market.”