Samsung's Note 7 Is A 'Fundamentally Defective Product,' Major Carriers Are Now Offering An Exchange
Shares of Samsung Electronics Co (KRXK: 005930) (which also trades (OTC: SSNLF)) stock on the South Korean exchange fell as much as 4.6 percent on Monday following various reports the company suspended production of its Galaxy Note 7 smartphone.
CNN Money, citing a "person familiar with the matter," reported that production of the phone has been temporarily suspended amid concerns that the replacement versions could also burst into flames.
Samsung's flagship smartphone and Apple Inc. (NASDAQ: AAPL) iPhone rival were recalled in August after several users reported their phones caught on fire. Replacement devices were soon issued, but the problem was not fixed.
John Legere, T-Mobile US Inc (NASDAQ: TMUS)'s CEO tweeted that out of an "abundance of caution" sales of the new Note 7 will be halted. He added that consumers with a Note 7 could return their device and select another branded phone and receive a $25 credit per person to offset any costs incurred.
Samsung Working With The Consumer Product Safety Commission
Similarly, a Verizon Communications Inc. (NYSE: VZ) spokesperson told The Verge that Samsung is working with the Consumer Product Safety Commission, but until an investigation is concluded, all sales of the Note 7 will be halted.
Verizon's consumers can exchange their Note 7 for another smartphone.
"We don't know why Samsung hasn't been more forthcoming about what's going on with these replacement devices, but it doesn't really matter," The Verge wrote. "Until we get more information, the simplest explanation is the best one: The Samsung Galaxy Note 7 is a fundamentally defective product and it should be pulled from the market without delay."
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Editor Note: A previous version of this story inaccurately conveyed the rebate. A $25 credit will be awarded per person, with approximately $25 billion in value having been lost since the recall was announced and an estimated $1 billion in recall costs alone.
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