Samsung Shares Plummet After FAA Warns Passengers of Note 7 Dangers

Samsung has urged customers to stop using its Galaxy Note 7 smartphones immediately and return them for exchange as soon as possible, after more reports of the handsets catching fire emerged.

"We are asking users to power down their Galaxy Note 7's and exchange them as soon as possible," said Koh Dong-jin, Samsung's mobile president. "We are expediting replacement devices so that they can be provided through the exchange program as conveniently as possible."

A Note 7 caught fire after its charger was unplugged (Image: Ariel Gonzalez)
The advice comes after U.S. aviation safety officials warned airline passengers not to turn on or charge Note 7 model handsets during flights.

In the unprecedented move, the Federal Aviation Administration also warned passengers not to store the phones in checked bags, citing "recent incidents and concerns raised by Samsung" about the recalled devices.

Last week, Samsung initiated a global recall of the 5.5-inch handsets after faulty batteries were blamed for 35 reports of exploding handsets and devices catching fire. In one case, a family in St Petersburg, Florida, described how a Note 7 phone left charging in their Jeep caught fire, destroying the vehicle.

On Saturday in Brooklyn, New York, a six-year-old boy was left with burns after the Note 7 he was using to watch videos exploded in his hands. The boy's family called 911 and he was taken to hospital. The boy has returned home following treatment and the family has been in contact with Samsung, but declined to comment further.

In another incident last week in Perth, Australia, a man's Note 7 exploded while it was charging overnight in his hotel room, causing $1,382 worth of property damage and leaving the handset "completely fried", said the owner. Samsung offered a replacement device, and the company confirmed that it was arranging to cover the bill for damages to the hotel room.

Samsung shares fell to their lowest level in two months on Monday, wiping $14.3 billion off the South Korean firm's market capitalisation. "Some said initially the Galaxy Note 7 could be the best smartphone ever, but now it’s possible the phone will go down as the worst ever," IBK Securities analyst Lee Seung-woo told Fortune, predicting weak sales in the fourth quarter.

Some analysts estimate the firm might lose up to $5 billion worth of revenue after accounting for recall costs – a huge blow to a company that was just starting to reclaim market share on strong sales of its Galaxy S7 smartphones launched in March.

Some commentators have blamed the flaw in the device on a rush to manufacture, given that Samsung launched the $900 Note 7 about a month ahead of Apple's iPhone 7 announcement in an attempt to pre-empt Cupertino.