Samsung's Note 7 Discontinuation Poised to Cost Company $2.3 Billion

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Following confirmation that Samsung has discontinued the Galaxy Note 7 amid its well-publicized fire-catching problems, the company today gave the first indication of how much the move will cost it for the third quarter of 2016. In a report by Bloomberg, Samsung is said to have cut its third quarter operating profit by $2.3 billion and adjusted profit expectations from 7.8 trillion won ($6.9 billion) to 5.2 trillion won ($4.6 billion).

The company's projection "effectively erases all the mobile business profit that analysts had been projecting," with revenue expected to dive from 49 trillion won to 47 trillion won. On the wave of Samsung's woes, Apple shares reached a record high this year, but Samsung had yet to divulge its potential quarterly loss. Analyst Greg Roh said that Samsung's prediction accounts not only for defective units, but also "the inventories of Note 7s in the channel as well as the components they bought a few months back."

"This is a huge cutback," said Greg Roh, an analyst at HMC Investment Securities Co. "It means Samsung has reflected not only the sales loss from the shutdown but it also means it would bear the costs of the inventories of Note 7s in the channel as well as the components they bought a few months back."

Samsung's mobile division was projected to report operating income of 2.7 trillion won in the quarter, according to estimates compiled by Bloomberg. HMC's Roh said the revised outlook probably erased that number. "We expected the mobile division to see about 2.6 trillion won previously but it will only see a mere 0.3 trillion won in the third quarter," he said.
Samsung's manufacturing division -- which sees the output of semiconductors, glass panels, appliances, and other materials -- is expected to keep the company profitable for the quarter.

As the recall of Samsung Galaxy Note 7 phones continues, the company has begun delivering fireproof shipping boxes to customers affected by the exploding smartphone (via TechCrunch). In one video shared by XDA Developers, the contents of the box are revealed to include three smaller boxes within the larger packaging and a static shield to place the Note 7 in.


The outside of the shipping container notes that it is "forbidden" to transport the contents of the box by aircraft, and can only be returned via ground shipment. Samsung's return box contents also include plastic gloves, reportedly due to the surface of the fireproof layer inside the main package having the potential to irritate some people's skin.

Article Link: Samsung's Note 7 Discontinuation Poised to Cost Company $2.3 Billion
 

Nr123*123

macrumors 6502
Jul 1, 2014
295
1,002
What a shame. Guess this what happens when you actually innovate with a product and push the boundaries.

Not everybody likes to churn out the same phone for three years...
iPhone 6, iPhone 6s, iPhone 7
 
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Douglas B

macrumors regular
Feb 25, 2010
149
148
Sydney
If I recall correctly, over 100% of profits in the mobile phone industry go to Apple and Samsung (with the other manufacturers making a loss).

With Samsung wiping themselves out for a quarter we could see a quarter of Apple reaping 99%+ of mobile profits.

To be clear, I'm not talking about revenue.
 
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keysofanxiety

macrumors G3
Nov 23, 2011
9,471
24,220
What a shame. Guess this what happens when you actually innovate with a product and push the boundaries.

Not everybody likes to churn out the same phone for three years...
iPhone 6, iPhone 6s, iPhone 7
Pahahaha. I'll take double per-core performance and reliability over a product that "innovates" and blows up. What's so innovative about the Note 7 anyway? I keep asking and nobody seems to have an answer. Even the iPhone 6S makes mincemeat of it.

I think what you meant to say is: "Guess this is what happens when you desperately push every known gimmicky feature into a phone, because you can't compete on support or performance, or have the self-control to ask yourself if an additional feature would improve the device."
 

kcamfork

Suspended
Oct 7, 2011
258
244
If I recall correctly, over 100% of profits in the mobile phone industry go to Apple and Samsung (with the other manufacturers making a loss).

With Samsung wiping themselves out for a quarter we could see a quarter of Apple reaping 99%+ of mobile profits.

To be clear, I'm not talking about revenue.
How can any company get over 100% of the profits in the mobile phone industry?
 
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Floatingworks

macrumors newbie
Mar 15, 2016
27
17
They will take a huge hit. Back in September Branding Brand conducted a survey, and the results conveyed that 34% of all Samsung smartphone customers will not get another Samsung phone. I imagine that defection rate is much higher now, especially after the replacement devices explode, smoke, or catch fire.

How will this impact Apple? According to the same survey, 34% of those switching from Samsung will now get an iPhone.
 

sinsin07

macrumors 68040
Mar 28, 2009
3,434
2,275
i don't think apple users would profit from this.
samsung is a very important player that helps pushing technology forward.

what would you gain if they had to close?
you don't have to buy their products.
Nah.
Only geeks think this way.
General public, not so much.
Blackberry used to be an important player. Not so much now.
Palm used to be an important player. Does not exist.
Nokia used to be an important player. Does not exist.
Something always fills the vacuum.
May not be a something you like, but it will get filled.