Samsung Galaxy Note 7: Third quarter profit slashed by a third
Samsung Electronics not only slashed its quarterly profit estimate by a third on Wednesday, the South Korean electronics giant also expects the withdrawal of its unsafe Galaxy Note 7 smartphone will wipe approximately mid-3 trillion won ($2.7 billion) from its operating profit from the fourth quarter of 2016 through the first quarter of 2017.
Samsung already allocated the expected direct cost from the discontinuation of Galaxy Note 7 sales in its third quarter earnings guidance revision announced on October 11 with a $2.3 billion cut for the preceding period. Now the company expects the drop in revenue from the discontinued sales to have an even more negative impact on operating profit for the next six month.
Analysts estimate that the Galaxy Note 7 termination would cost the company in total about $5.3 billion. Chung Chang-Won at Nomura Holdings Inc., had estimated that the Note 7 termination would cost the company about $5 billion in operating profit through 2017. Moving forward, Samsung Electronics plans to normalize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge.