Samsung sees extra $3bn profit hit from Note 7 crisis

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Note 7 profit

Samsung Technology on zoommasti report  on Friday said the Note 7  crisis over its exploding Note 7 smartphones would cost another $3 billion-plus in lost income over the next two accommodation, but hoped expanded sales of its other flagship handset would help cushion the impact.

The profit caution came two days after the South Korean electronics giant slashed its operating earnings for the third district by $2.3bn.

After a recall problem with the large-sized Galaxy Note 7 turned into a full-blown crisis, Samsung announced earlier this week that it was scrapping the model completely ─ a overwhelming move for a company that prides itself on the quality production of cutting-edge technology.

 

On top of the third-district loss, Samsung said the fall in sales arising from the choice to discontinue the Note 7 would continue to impact profit margins in October-March ─ including the vital holiday buying season.

It estimated an operating profit loss in the fourth district at around the “mid-2 trillion ($2.2 billion) won range” and 1.0 trillion won for the first quarter of 2017.

“Moving forward, Samsung Electronics plans to regularize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge,” the company said in a statement.

Samsung announced a recall of 2.5 million units of the extra-large Galaxy Note 7 smartphone in early September after several devices exploded or fixed fire.

When replacement phones also started to combust, the company finally decided to kill off the Note 7 technology for good.

The company responsible out of order batteries made by an unnamed supplier ─ extensively believed to be its sister company Samsung SDI.

Brand costs

But many experts and analysts said the problem may have been with the handset’s underlying technology, and Samsung’s choice to rush the launch of the smartphone in front of the latest iPhone from arch-rival Apple.

In its statement, Samsung promised  to “focus on ornamental product safety for consumers by making significant changes in its quality assurance processes”.