Friday, October 14th, 2016

Galaxy Note 7 exploding battery case will cost Samsung $5.3bn cut in profit

Narada Desk | October 14, 2016 3:40 pm Print
Samsung officially stopped producing Galaxy Note 7 smartphones after reports of battery explosion. the company expects a negative impact of around $3bn on its profit over the next two quarters due to the discontinuation of Galaxy Note7 sales.

Samsung Electronics on Friday said the company expects a negative impact of around $3bn on its profit over the next two quarters due to the discontinuation of Galaxy Note7 sales.

According to South Korean tech giant, the company expects the hit from the fourth quarter of 2016 through the first quarter of 2017.

Media reports revealed that the revised outlook brings to more than $5bn losses the company expected to suffer after the overheating issues of Note 7.

A statement from Samsung read as: “The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision announced on Oct. 11, but expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters.”

Days back, Samsung officially stopped producing Galaxy Note 7 smartphones after reports of battery fires, saying “for the benefit of consumers’ safety, we stopped sales and exchanges of the Galaxy Note 7 and have consequently decided to stop production.”

The company had earlier recalled millions of phones, but ceased production after replaced phones experienced the same problem.

The high-end Galaxy Note 7 smartphones were launched in August in a bid to compete with Apple’s new iPhone 7 in the smartphone market.

However, the model couldn’t survive in the market after several reports of battery explosion.

Following media reports of smartphone’s explosion, many airlines had banned its passengers from using or charging the Note 7 during flights.

In the latest statement, the company said it plans to normalise its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge.

“Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes,” the statement revealed.

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