Roger Fingas
As a result of having to recall and eventually kill off the Galaxy Note 7, Samsung on Friday predicted a further $3 billion reduction in operating profits through March 2017, beyond the $2.3 billion it already announced.
The sum comes on top of an estimated $2.3 billion hit to third-quarter profits Samsung Electronics disclosed on Wednesday, according to Bloomberg. About $2 billion of the additional impact should come in the December quarter, the remainder in Q1 2017.
In the meantime, Samsung said it's hoping to compensate by growing sales of the Galaxy S7 and S7 Edge, released earlier this year. Those phones have proven popular — the Note 7, however, was intended to be Samsung's direct challenge to Apple's iPhone 7 and 7 Plus.
That may ironically have been the cause of the company's problems, with rushed production schedules indirectly leading to battery fires. A later recall failed to halt fire incidents.
In spite of the major blow to the company's finances and reputation, Samsung Electronics is likely to remain in the black, mostly because of chip and display sales. The company is a major components supplier, Apple in fact being one of its clients. Less than half of its revenue comes from its mobile division.
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54 Comments
I like the fact that Apple is not publicly gloating the way Samsung would if the shoe were on the other foot. Sammy would feature exploding iPhones in their ads. Apple is showing real corporate class by just keeping on keeping on. Not that Samsung will learn anything from Apple's example.
I do not believe this number, I think Samsung is jacking up the number. They are trying to send a signal to the market that demand for the galaxy 7 is higher than reality. I also believe the rolling up other costs and loses they have and using the opportunity to expense them all at the same time so it does not look bad they have other issues. I have seen companies do this exact thing in the past.
Don't forget the permanent hit to their brand. Don't buy a Samsung, they cut corners on safety to rush products to market. Only a fool would trust Samsung again. If you want an Android phone there are many options besides this bum outfit.