78 views

Samsung operating profit to go up in flames to the tune of £2.5bn in the next two quarters after Galaxy Note 7 discontinuation

Francesca Washtell
Follow Francesca
Consumer Product Safety Commission Announces Recall Of Samsung's New Galaxy Note 7
Samsung's Galaxy Note 7 was intended to take on Apple's iPhone (Source: Getty)

South Korean electronics giant Samsung said today it expects to take a $3bn (£2.46bn) hit to its operating profit over the next two quarters because of the discontinuation of its Galaxy Note 7 smartphone.

The announcement brings the total losses from the debacle to around $5.3bn.

In a market update earlier this week, the company slashed its estimates for the quarter to the end of September to 5.2 trillion won (£3.8bn), dialling back on initial estimates of 7.8 trillion won.

It also adjusted revenue estimates from 49 trillion won for the quarter to 47 trillion.

On Tuesday, Samsung said it will completely ditch further production of the device after numerous reports worldwide that the battery was prone to overheating and many had exploded.

Read more: Will Samsung’s image burn and crash after Galaxy fires?

Around $18bn was wiped from the group's value as shares plummeted more than eight per cent, its biggest intraday loss since the financial crisis.

The device, which was unveiled in August, was meant to be a major competitor to Apple's latest iPhone. However, Samsung was forced to order a recall and replacement scheme by September, though even replacement phones were found to be faulty.

Read more: US safety body launches formal recall of exploding Samsung smartphones

In response, Apple has ramped up its iPhone production from 80m units to 100m units.

The Note 7 was lauded as being even more advanced than the most recently available iPhones, featuring eye-scanning technology that moved a step beyond Apple's use of biometrics. The Note 7 is also waterproof to depths of five feet, has a curved screen and is compatible with a new VR headset.

Related articles