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.