Of course everyone expected that Samsung will be suffering huge losses because of the whole brouhaha over the Galaxy Note 7’s exploding batteries, the subsequent recall and the eventual complete pull-out. What was not known is how much it will actually affect the business financially, not to mention reputation-wise. Now the Korean OEM has released their approximate losses for the fourth quarter of 2016 and the first quarter of 2017 and it may be around 3 million won or around $2.6 billion.
Already included in these figures are the direct costs from the discontinuation of the Galaxy Note 7 sales, after continued explosion incidents from the replacement units forced them to permanently shut down production. They expect bigger drops in the next two quarters as the discontinued sales will affect the operating profit as well. The fourth quarter will probably yield losses of 2 trillion won while the first quarter for next year will bring about 1 trillion won worth of losses.
For the third quarter of 2016, they were estimating to get a profit of 7.8 trillion won but the earnings report indicated that they got only around 5.2 trillion won. This is 33.3% less than their target and 29.6% down from the same period last year. As expected, their shares have been consistently down, ending at 0.65% down on Wednesday, but not as bad as the 8% fall last Tuesday.
But of course, life moves on. They said they will be expanding sales of their well-received flagships, the Galaxy S7 and Galaxy S7 edge, although what that really means they haven’t said yet. They also assured their users that they “will focus on enhancing product safety” through improving the quality assurance process. This means no more exploding anything on their upcoming new devices.
SOURCE: Samsung
