Note 7 recall to have only a minor hit on Samsung’s Q3 earnings - report - Mobile World Live

Note 7 recall to have only a minor hit on Samsung’s Q3 earnings – report

03 OCT 2016

Despite the global recall of its Galaxy Note 7, financial analysts expect Samsung’s overall revenue in Q3 to remain stable on a sequential basis and its operating profit to decline only about 6 per cent, following a sharp rebound in Q2.

According to FnGuide, the world’s largest smartphone maker will post a Q3 operating profit of KRW7.5 trillion ($6.79 billion), down from KRW8 trillion ($7.14 billion) in Q2, with sales forecast to hit KRW51 trillion (from KRW50.9 trillion last quarter). The March-June period was the first time in nine quarters Samsung posted an operating profit at the KRW8 trillion level, Yonhap said.

Samsung issued a recall for the Note 7 in 10 markets, including the US and South Korea, a month ago, just weeks after the launch of the device on 19 August. With an estimated 2.5 million Note 7 units sold, analysts had argued the recall could cost Samsung as much as $1 billion in profit and $5 billion in revenue.

Analysts now believe the damage will be nowhere near as severe as first estimated, after the vendor moved rapidly to replace Note 7 models that had faulty batteries to limit damage to its reputation and bottom line. It said last week about 60 per cent of the recalled devices have been exchanged, with the vast majority of users choosing a new version of the smartphone.

The company’s strong chip business is expected to help offset some of the handset division’s drop in earnings, Yonhap reported.

It will announce its earning guidance for Q3 on 7 October.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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