160902samsungnote72100680696orig

Samsung cuts revenue and profit forecast after Note7 fiasco

Samsung Electronics has cut its revenue and profit forecasts for the third quarter, after the disastrous launch of its flagship Galaxy Note7, which eventually led to the company recalling the smartphones and stopping their production in the wake of reports of overheating batteries.

The South Korean company said Wednesday that revenue for the quarter was likely to be about 47 trillion won (US$4.2 billion), down from the 49 trillion won that it had expected earlier this month in a preliminary forecast. Operating profit is expected to drop by about 2.6 trillion won to 5.2 trillion won.

The company said it was revising its revenue and profit forecast because of the Note7 debacle.

Samsung said Tuesday it was discontinuing production of the Note7 smartphone, after fires and even explosions were reported involving replacement units that had been issued after it was found that a battery-cell issue could lead to overheating and even fires in some of the Note7 phones shipped since mid-August. About 1 million Note7 phones were to be replaced by the company under a recall announced by the Consumer Product Safety Commission in the U.S. in mid-September.

Among the commitments the company gave to customers in the U.S. under the recall program was a promise to replace the smartphones with new Note7s, or refund the cost of the phone, or exchange it with Galaxy S7 and S7 edge smartphones. By Monday, when the company asked carriers and retailers worldwide to stop the exchange of the Note7, only the other options were left to customers.

The reduced revenue and profit forecast could reflect the lost business in the third quarter and the costs of the recall.

IDG Insider

PREVIOUS ARTICLE

« Facebook spins Yarn to replace NPM packager

NEXT ARTICLE

Intel targets commercial market with company-branded Falcon 8+ drone »
author_image
IDG News Service

The IDG News Service is the world's leading daily source of global IT news, commentary and editorial resources. The News Service distributes content to IDG's more than 300 IT publications in more than 60 countries.

  • Mail

Recommended for You

Trump hits partial pause on Huawei ban, but 5G concerns persist

Phil Muncaster reports on China and beyond

FinancialForce profits from PSA investment

Martin Veitch's inside track on today’s tech trends

Future-proofing the Middle East

Keri Allan looks at the latest trends and technologies

Poll

Do you think your smartphone is making you a workaholic?