Technology

Samsung blames Note 7 woes as profit forecast slashed by $2.3bn

Samsung Makes Effort to Recall All Defective Note 7 Smartphones

Crisis-hit Samsung has hacked $2.3bn from its third quarter profits forecast as it deals with the fall-out from scrapping its showpiece Galaxy Note 7 smartphone. The electronics giant made the announcement - a gloomy revision of figures released just a few days ago - in a surprise regulatory filing after financial markets closed in South Korea. It cited the financial impact of pulling the phone from the market for its decision to cut operating profit guidance to $4.66bn from $7bn. The earlier figure would have been a 5% rise on last year as its components business continues to thrive but has been dragged down by the smartphone recall.

Nobody could have expected the figure that Samsung just guided for. We'll have to see how the market reacts tomorrow.

Alpha Asset Management fund manager C J Heo

Samsung has been under pressure since reports emerged that the phone's battery could explode and catch fire. It has now withdrawn the device from sale. Its share price has taken a pounding since news of the battery defect broke, with more than $18bn wiped off its market value. It also announced on Wednesday it had been forced to fork out for fire-resistant packages to send to its customers in the US so they could safely return devices to retailers. The shipping boxes, the company explained, were a legal requirement for shipping lithium-ion batteries or products containing them.

There needs to be explanation from Samsung in order for consumers to understand that problems won't occur in the next models...Samsung needs to clearly explain and admit what went wrong

Kim Hyun-su, a fund manager at IBK Asset Management
Summarized by

2.5 million

SMARTPHONES

Recall goes wrong

In September, Samsung recalled around 2.5 million phones after complaints of exploding batteries. It later insisted that all replaced devices were safe. However, that was followed by reports that those phones were catching fire too.

Samsung Electronics

Samsung Electronics Co., Ltd. is a South Korean multinational electronics company headquartered in Suwon, South Korea. Through extremely complicated ownership structure with some circular ownership it is the flagship division of the Samsung Group, accounting for 70% of the group's revenue in 2012.

Topic in-depth

Samsung's ditching of flagship phone portends Android turf war

Samsung Electronics’s abandonment of the Galaxy Note 7 due to safety concerns will likely touch off a turf war among Android smartphone makers, analysts said, presenting them a rare opportunity to gain share but with less room for archrival Apple Inc.
Reuters via Yahoo News

Topic in-depth

Samsung has no idea why the Note 7 keeps catching fire, NYT claims

Even now — more than a month after the first reports of issues with Note 7 devices surfaced and with the phone out of production — the New York Times says the company doesn't know why its phones are spontaneously combusting, despite deploying hundreds of employees to work on the problem.
The Verge