According to the Wall Street Journal, Samsung’s global smartphone recall is estimated to cost more than $1 billion, Samsung Electronics Co. is moving swiftly to sell stakes in other technology companies to raise cash. Upon further investigation by TechHabor we hear this is because their shares are tanking currently and the market is not so good for them.
See Also : Note 7 callback will cost Samsung $1 billion
The world’s biggest smartphone maker said Sunday it has sold shares in computer-drive maker Seagate Technology PLC, chip maker RambusInc., Dutch semiconductor-equipment maker ASML Holding NV and Japanese electronics maker Sharp Corp.
The divestments come as Samsung said this month it would recall 2.5 million Galaxy Note 7 smartphones globally after reports of the phones catching fire. While Samsung didn’t disclose how much it would raise from the share sales, any cash generated from the sale would help it pay down ballooning costs from the smartphone industry’s biggest recall to date.
Under the guiding hand of heir apparent Lee Jae-yong, Samsung has been moving to shed noncore assets to raise cash as the company seeks to expand into other areas including biopharmaceuticals.
Over the past decade, Samsung has used its massive manufacturing scale to expand into smartphones, televisions and components such as displays and semiconductors. But top executives believe that those markets are no longer able to generate the huge growth returns Samsung has seen in the past. In the smartphone market, Samsung is currently facing Chinese and Indian upstarts that are offering high-spec phones at cheaper prices. Meanwhile, Apple Inc. on Friday launched its newest iPhone, matching Samsung’s waterproof and advanced camera phones.
In a statement Sunday, the South Korea-based tech giant said it sold off its entire 4.2% stake in Seagate Technology and its whole 4.5% stake in Rambus, both based in California. Samsung also confirmed the previously reported sales of half of its 2.9% stakein ASML Holding and its full 0.7% stakein Sharp.
A person familiar with the stake sale told The Wall Street Journal last week Samsung was selling about half of its stake in ASML for €606 million ($676 million). Samsung’s stakes in Rambus, Seagate and Sharp were valued at more than $500 million combined, based on Friday’s closing prices.
The latest divestment aims to “focus on core business” sectors by streamlining its investment assets, Samsung said in the statement. It noted Samsung’s business cooperation with those firms would remain intact, despite the share disposals.
The deals came as Samsung contends with the massive recall of its Galaxy Note 7 smartphones after reports of overheating and exploding batteries in the new top-of-the-line phone. The U.S. Consumer Product Safety Commission on Thursday announced a formal recall of the mobile handset. Analysts predict the recall could cost Samsung as much as $1 billion.
Despite its swift announcement on Sept. 2 to voluntarily recall more than 2.5 million phones, Samsung has still been under pressure to act more aggressively to address the issue.
Samsung recently saw investors dump its shares in the wake of the recall crisis, wiping more than $10 billion off the company’s market value on Friday, Sept. 9, and another $15.9 billion off the following Monday.
Meanwhile, as its shares were suffering, Samsung moved to step up the workload for Lee Jae-yong, the son of Chairman Lee Kun-hee, who remains incapacitated since he was hospitalized following a heart attackmore than two years ago.
The company said Monday it had nominated to its board of directors the younger Mr. Lee, who has served as the company’s vice chairman since 2012, without sitting on the board. His addition to the board will be put to a shareholder vote on Oct. 27.