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Apple (AAPL) iPhone Batteries Reportedly Explode in China

Zacks Equity Research
Updated

It seems that Apple Inc. AAPL is facing the same safety issues as its rival Samsung, as eight iPhone 6 handsets have reportedly exploded in China.

As per a report released by the Shanghai Consumer Council, the handsets’ batteries powered down emitting smoke and eventually exploded. The Council has called upon Apple to look into the matter.  The Council report also added that the company had, earlier in the year, replaced a woman’s iPhone that exploded with a new one without “addressing the cause” of the explosion.

APPLE INC Price

APPLE INC Price | APPLE INC Quote

In its response to a Reuters mail, Apple claimed that the incidents occurred due to the overheating of the lithium ion batteries caused by “external physical damages”. Apparently, investigations are on for the overheating and battery explosion problems of iPhone as the company is facing a number of complaints.

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Per a Reuters report, analysts are of the opinion that Samsung’s Galaxy Note 7 fiasco, which resulted in recall of some 2.5 million units, caused a sense of “distrust” among Chinese consumers towards international (as well as expensive) smartphone brands. Plus, increasing competition from home grown cheaper smartphones, has highly affected the sale of iPhones in the country.

Though Apple is pinning its hopes on iPhone 7 to help it regain lost ground in China, the increasing safety issues regarding the product are a big concern.

At present, Apple has a Zacks Rank #3 (Hold). Year to date, Apple shares have generated a return of 4.46% compared with the Zacks Computer Mini Industry’s gain of 5.13%.

Better-ranked stocks in the wider technology space include TiVo Corporation TIVO, Facebook Inc. FB and Akamai Technologies, Inc. AKAM. While TiVo sports a Zacks Rank #1 (Strong Buy), Facebook and Akamai are Zacks Rank #2 (Buy) stocks. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the trailing four quarters, TiVo, Facebook and Akamai have yielded positive average earnings surprises of 97.76%, 21.11% and 2.51%, respectively.

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