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Samsung to sustain staggering loss following Galaxy Note 7 debacle

October 18, 2016 • World News

Samsung Electronics expects to be hit with a $3 billion loss in income due to the discontinuation of the Galaxy Note7 production and sales.

Image credit: www.samsung.com

Image credit: www.samsung.com

The company said in a statement on Friday that it forecasts losses of around mid-two-trillion won in the fourth quarter and additional one trillion won in the first quarter of next year.

“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,” reads the statement.

“The negative impact is estimated in the mid-2 trillion won range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017.”

The end of production of Samsung’s troubled phone was instigated by a number of reports of batteries catching fire and even exploding. The company initially attempted to rectify the problem by issuing replacement phones, but decided to discontinue production altogether after replacements also malfunctioned.

Samsung said it will now attempt to “normalise” its mobile business by expanding sales of flagship models such as Galaxy S7 and Galaxy S7 edge, while at the same time focusing on enhancing product safety for consumers by making significant changes in its quality assurance processes.

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