SEOUL, Oct. 13 (Korea Bizwire) – International ratings agency Standard and Poor’s said Thursday the global recall and discontinuation of the Galaxy Note 7 smartphone will not affect its ratings on Samsung Electronics Co.
“We believe the impact on the ratings will be limited at this stage” mainly due to Samsung’s significant net cash holdings of about 65 trillion won (US$57.3 billion) as of June 30, the ratings agency said in a statement.
Standard and Poor’s said the financial impact of the Note 7 recall will be “limited,” because of Samsung’s “stronger-than-expected performance in its memory semiconductor, consumer electronics, and display panel businesses based on its leading market positions and recovering profitability in the businesses.”
However, Standard and Poor’s predicted that Samsung’s brand image and its leading status in the smartphone sector might see “some erosion” following the Note 7 recall.
“Still, the extent and duration of such weakening in its market position remain uncertain at this point and depend on how quickly the company can restore its reputation, possibly through the launch of a new flagship model in the first half of next year,” Standard and Poor’s said.