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Samsung's Heir Apparent was hoping for the Galaxy Note 7 to outflank the iPhone 7

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According to a new report this afternoon, "A worsening crisis over faulty Samsung Electronics Co. smartphones has thrust the conglomerate's heir apparent, Lee Jae-yong, into his first critical leadership test. In a series of phone calls on Tuesday with Samsung's mobile chief, D.J. Koh, and other executives, Mr. Lee decided to pull the plug on the Galaxy Note 7, a highly regarded smartphone that Samsung had hoped would outflank Apple Inc. 's new iPhone 7, according to a person briefed on Mr. Lee's conversations. Instead, it had become an albatross as the company struggled to cope with a string of reports about the device catching fire, reports the Wall Street Journal (WSJ) . On Tuesday, Samsung told Galaxy Note 7 users world-wide to immediately switch off their devices."


On October 7 Patently Apple posted a report titled "Samsung's Preliminary Quarterly Profit Guidance shows false Profit by not accounting for Note7 Recall Costs." Today we learn that "Mr. Lee's decision, which came more than a month after Samsung first issued a global recall of 2.5 million smartphones, is likely to cost it $4 billion or more in recall expenses and lost sales, analysts estimate, enough to wipe out an entire quarter of mobile profits. The move is an attempt to ringfence once and for all a reputational crisis that looked poised to spread far beyond the Galaxy Note 7, the person familiar with the matter said.


Mr. Lee pushed for a recall of Galaxy Notes 7s in early September in hopes of quickly stemming potential damage to the brand, according to the person, overruling executives who sought to play down early reports of fires as a statistical blip.


As reports began emerging late last month that Samsung's replacement phones were also suffering from the same problems, Mr. Lee was at first reluctant to throw in the towel, the person said.


But after a Southwest Airlines flight was evacuated last week after reports of a smoking Samsung smartphone, he began leaning toward a total shutdown of the product, the person said." The Southwest Airlines incident was the turning point for most in the press covering this story. For more on the politics of Mr. Lee, see The Wall Street Journals report here.


More on this could also be found in a Korea Herald report titled "Note 7 Crisis puts Lee-Jae-yong to test.


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