Note 7 fiasco could burn a $17 billion hole in Samsung accounts

Samsung Electronics' worst-ever recall could cost the company as much as $17 billion after it halted sales of its flagship Galaxy Note 7 for a second time, spelling an almost certain end for the ill-fated premium model.

Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire and on Tuesday the crisis deepened: The company told mobile carriers to stop sales or exchange of the $882 device and asked users to shut off their phones while it investigated new reports of fires in replacement Note 7s.

As the world's top-selling smartphone company awaits results of probe by US safety regulators, some investors and analysts predict Samsung may scrap the Note 7 and move on to successor models to limit the financial and reputational damage.

"In the worst case scenario, the US could conclude the product is fundamentally flawed and ban sales of the device," said Song Myung-sub, an analyst at HI Investment Securities.

If Samsung stops selling the Note 7s, that will translate into lost sales of up to 19 million phones that the firm was expected to generate during the Note 7's product cycle, according to analysts.

That would equate to nearly $17 billion in lost revenue, based on a Reuters calculation of the cost of the phones.

That's a big increase from $5 billion in missed sales and recall costs analysts initially executed Samsung to incur under the assumption that the firm would resume global Note 7 sales in the fourth quarter.

Chances of that now look slim. South Korea's Hankyoreh newspaper, citing unnamed sources, said on Tuesday Samsung will likely stop Note 7 sales permanently. Samsung did not comment on the report.

"This has probably killed the Note 7 brand name," said Edward Snyder, the managing director of Charter Equity Research.

"By the time they fix the problem they have to go through re-certification and re-qualification and... read full story

Driverless vehicle to be tested on UK streets for the first time

A driver-less vehicle carrying passengers is taking to Britain's public roads for the first time on Tuesday, as part of trials aimed at paving the way for autonomous cars to hit the highways by the end of the decade.

The government is encouraging technology companies, car makers and start-ups to develop and test their autonomous driving technologies in Britain, aiming to build an industry to serve a worldwide market which it forecasts could be worth around £900 billion ($1.1 trillion) by 2025.

Earlier this year, it launched a consultation on changes to insurance rules and motoring regulations to allow driver-less cars to be used by 2020 and said it would allow such vehicles to be tested on motorways from next year.A pod - like a small two-seater car - developed by a company spun out from Oxford University will be tested in the southern English town of Milton Keynes on Tuesday, with organizers hoping the trials will feed vital information on how the vehicle interacts with pedestrians and other road-users.

"Today's first public trials of driver-less vehicles in our towns is a ground-breaking moment," Britain's business minister Greg Clark said.

"The global market for autonomous vehicles present huge opportunities for our automotive and technology firms and the research that underpins the technology and software will have applications way beyond autonomous vehicles," he said.

The pod will operate fully without human control, using data from cameras and radars to move around pedestrianized areas. It was made by Oxford University spin-out Oxbotica, with software developed by the university's Oxford Robotics Institute.

Car makers Jaguar Land Rover and Ford are both part of driver-less car projects in Britain, as major car makers seek to head off the challenge from technology firms such as Alphabet Inc's Google, which is also developing autonomous vehicles.

But all parties still need to overcome technological and legal obstacles including determining who would be responsible in the event of an accident, with recent accidents involving driving assistance systems raising safety concerns.

Organizers in Milton Keynes ran a number of exercises ahead of the trial including mapping the town and conducting safety planning with the local council ahead of Tuesday's trial.

The city, around 45 miles (70 km) north of London, was selected alongside three other locations for autonomous technology projects partly due to its wide pavements and cycle path network.

Britain is aiming to be more flexible in its approach to driver-less testing than some other major economies, with Germany saying it will require black boxes to be fitted in such vehicles and automakers having to navigate different rules across U.S. states.

Ford shuts Mustang factory for a week after sales plunge

Ford Motor is shutting its Mustang factory in Michigan for a week after the iconic sports car suffered a 32 per cent sales decline in the US last month and was outsold by the Chevrolet Camaro for the first time in almost two years.

The second-largest US automaker idled the factory in Flat Rock, south of Detroit, to match production capacity with demand, Kelli Felker, a company spokeswoman, said in an e-mailed statement. The plant, which employs 3,702 workers and makes Mustangs and Lincoln Continentals, will resume production October 17, Felker said. Under the automaker's labor agreement, workers will be paid during the shutdown.

The idling may be a sign of the growing weakness of the US auto market, which had been a leading driver of economic growth. Automakers' monthly sales have been coming up short - though they beat expectations in September - and many analysts are now predicting the US auto industry won't match last year's record of 17.5 million cars and light trucks.

Mustang, which is among Ford's most storied nameplates, received a racy redesign two years ago on the car's 50th anniversary. That new look helped propel the Mustang past the Camaro in 2015 to regain its title as the top-selling sports car in America, which it had held for decades before General Motors redesigned the Camaro in 2010.

Camaro overtook Mustang last month for the first time since October 2014 on the strength of incentives that more than tripled last month to $3,409 per car, compared with an average discount of $2,602 on the Ford pony car, according to data from researcher JD Power obtained by Bloomberg.

"In terms of incentives, we're always going to be disciplined, but we'll be competitive as well," Erich Merkle, Ford's sales analyst, said in an interview. Ford has sold 87,258 Mustangs in the US this year, down 9.3 per cent, while GM had Camaro sales of 54,535, off 11 per cent, according to researcher Autodata Ford Chief Executive Officer Mark Fields has said the US auto market has plateaued and that showroom sales are weakening.

Ford began selling Mustang globally last year, and the factory produces... read full story

Samsung scraps Galaxy Note 7

Samsung Electronics Co Ltd scrapped its flagship Galaxy Note 7 smartphone on Tuesday less than two months after its launch, dealing a huge blow to its reputation and outlook after failing to resolve safety concerns.

Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire and on Tuesday it finally pulled the plug on the $882 device in what could be one of the costliest product safety failures in tech history.

The decision to scrap the Note 7 came after fresh reports of fires in replacement devices prompted new warnings from regulators, phone carriers and airlines.

"(We) have decided to halt production and sales of the Galaxy Note 7 in order to consider our consumers' safety first and foremost," the South Korean firm said in a filing to the Seoul stock exchange.

Samsung said earlier it asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem. The company is offering to exchange Note 7s for other products or refund them.

Samsung's decision to pull Note 7s off the shelves not only raises fresh doubts about the firm's quality control but could result in huge financial and reputational costs.

Analysts say a permanent end to Note 7 sales could cost Samsung up to $17 billion and tarnish its other phone products in the minds of consumers and carriers.

Investors wiped nearly $20 billion off Samsung Electronics' market value on Tuesday as its shares closed down 8 per cent, their biggest daily percentage decline since 2008.

A TIMELINE OF THE TECH GIANT’S WORST-EVER RECALL CRISIS
Aug 2: Samsung launches Galaxy Note 7 at a New York media event
Aug 19: Samsung starts Galaxy Note 7 sales in 10 markets, including United States and South Korea
Aug 24: Report of a Note 7 explosion surfaces in South Korea
Sep 1: Samsung starts Galaxy Note 7 sales in China
Sep 2: Samsung announces global recall of 2.5 million Note 7 phones, citing faulty batteries
Sep 8: US Federal Aviation Administration advises passengers to not turn on or charge Note 7 smartphones aboard aircraft or stow them in plane cargo
Sep 9: US Consumer Product Safety Commission urges Galaxy Note 7 users to stop using their phone
Sep 15: US Consumer Product Safety Commission formally announces recall of about 1 million Note 7 phones
Sep 16: Florida man sues Samsung for burns from Note 7 explosion. Samsung says to resume Note 7 sales in South Korea on September 28
Sep 19: Samsung says a Note 7 phone a China user claims caught on fire was caused by external heating
Sep 21: Verizon Communications, Sprint Corp begin taking orders for new Note 7s
Sep 29: Samsung says more than 1 million people globally now using Note 7s with safe battery
Oct 6: A Southwest Airlines plane in the United States evacuated due to smoke from a Note 7 device on board
Oct 10: Samsung says it is adjusting Note 7 shipments for inspections, quality control due to more phones catching fire
Oct 11: Samsung scraps Note 7 production

The premium device, launched in August, was supposed to... read full story

Global growth benefited 'too few' people for 'too long': Christine Lagarde

Global growth has benefited ‘too few’ people for ‘too long’ and inequality remains high in many countries as trade has increasingly become a ‘political football’, IMF (International Monetary Fund) chief Christine Lagarde has said calling on world leaders to focus on an inclusive development strategy.

“The first priority for inclusive growth is to escape the ‘new mediocre’ of low growth, low employment, and low wages. That means using all policy tools – monetary, fiscal, and structural: to maximize the synergies within countries — and amplify the impact though coordination across countries,” she said at the annual fall meetings of the IMF and the World Bank here yesterday.

“Putting it simply: growth has been too low, for too long, and benefiting too few,” the International Monetary Fund Managing Director said. “The social and political consequences are becoming all too apparent. Inequality remains too high in too many countries. Conflict and migration exert a terrible toll. Trade has become a political football. And supporters of economic integration — and cooperation — are on the defensive,” she said.

Lagarde said the world needs a “transition to the digital age — but a transition that benefits everyone. And we need to accelerate now,” she said. The IMF has projected global growth at 3.1 per cent this year, with only a modest acceleration to 3.4 per cent next year, she said.  With interest rates at historic lows, there is no better time for public investment: to expand access to high-speed internet, promote energy-efficient transport, and build climate-friendly infrastructure, Lagarde asserted.

“Even where fiscal space is unavailable, governments can reallocate funds into R&D by offering tax credits and supporting public research institutions. Remember: all the technologies that make our mobile phones ‘smart’ have benefited from public funding — wireless networks, GPS, touch screens. This shows that good public policies can boost growth for decades to come,” she added.

Lagarde said the second priority for inclusive growth is providing everybody with a level playing field. For this, she called for increasing the equality of opportunity, promote fair burden-sharing and preserve competition and market access. “This is especially important for the digital economy, where network effects can lead to increases in market concentration — which harms innovation and concentrates wealth at the top,” She said.

By injecting more—and fairer—competition, we can ensure that the vast potential of the digital age can be managed for the benefit of all,” she  said.