​Samsung expects around $3b profit cut until 2017 first quarter

Samsung estimates it will lose around 3.5 trillion won ($3 billion) in operating profits from the fourth quarter of the year to the first quarter of 2017 due to ending the Galaxy Note 7.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Electronics expects to lose out on somewhere between 3.3 trillion to 3.7 trillion won (around $3 billion) in operating profits between Q4 2016 to Q1 2017, after permanently ending sales and production of the Galaxy Note 7 on October 11.

The announcement comes on the back of its revised earning guidance for the third quarter in which it expects to lose $2.3 billion in profits.

Negative impact for the fourth quarter will be between 2.3 trillion won and 2.7 trillion won, and will be 1 trillion won for the first quarter of next year, the company said.

Combining the direct cost of the recall of the phones and loss of potential earnings, the whole Galaxy Note 7 saga is expected to cost the South Korean tech giant near $5 billion.

Samsung said it was releasing the estimates to inform the market of the impact of the discontinuation.

The South Korean company will expand sales of the Galaxy S7 and Galaxy S7 Edge, released earlier this year, to normalize the mobile business, it said.

After the initial recall due to the phones catching fire, the company said defective batteries were the cause.

Reports of such incidents continued despite consumers being given alleged defect-free exchanges, and the firm suspended production before ending the phone for good.

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