Samsung Warns Phones Crisis to Cut Profits by a Third

Patrick Frater
Variety

BUSAN – South Korean electronics giant Samsung announced a revised profit forecast following Tuesday’s decision to halt production of its flagship Galaxy Note 7 smart phone.

The company, which had issued guidance for the third quarter only last week, Wednesday cut its median estimate of operating profit from $697 million (KRW7.8 trillion) to $465 million (KRW5.2 trillion.) Consolidated sales in the quarter are expected to drop from $4.38 billion (KRW49 trillion) to $4.20 billion (KRW47 trillion.)

In a brief statement it said: “After recent incidents and in consideration of our consumers’ safety, Samsung Electronics stopped sales, exchanges and production of the Galaxy Note 7… revised pre-earnings guidance reflects the impact of this decision on the third quarter earnings.”

After dropping 7.5% on Tuesday, Samsung shares stabilized and traded down by only 0.84% on Wednesday. The announcement was made after the Korean stock market had ended trading for the day.

After a series of explosions and fires, bans by many airlines, and a product recall in mid-September, the company’s smartphone business has been in turmoil. On Tuesday it took the dramatic stem of halting all sales of the Note 7 and told existing users to turn off their devices. Later in the day it said that it would cease manufacturing the product entirely.

Related stories

Samsung Is Killing the Galaxy Note 7 Because of Fire Hazard

Samsung Tells Note 7 Users to Switch Off as Smartphone Crisis Deepens

Samsung Halts Galaxy Note 7 Smartphone Production Amid Ongoing Fire Risk

Get more from Variety and Variety411: Follow us on Twitter, Facebook, Newsletter