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Reuters: Samsung Electronics Co Ltd on Friday said it expected to take a hit to its operating profit of about $3 billion over the next two quarters due to the discontinuation of its fire-prone Galaxy Note 7 smartphone.
The outlook brings to about $5.3 billion the total losses the global smartphone leader has forecast as a result of the overheating issues, after it said on Wednesday it would suffer a $2.3 billion hit to third-quarter profit.
The premium device that was meant to compete with Apple Inc’s latest iPhones at the top end of the smartphone market had to be scrapped earlier this week, less than two months after its launch, due to safety fears. The South Korean tech giant said in a statement on Friday it expected the blow to profit to be in the mid-3 trillion won over the next two quarters - in the mid-2 trillion won range in the October-December period and about 1 trillion won ($900 million) for the first quarter of 2017.
Samsung shares, which have fallen about 8% this week, edged up 0.6% as of 0228 GMT on Friday, versus a 0.5% gain on the broader market.
To make up for the lost revenue, Samsung said it would expand sales of gadgets like the Galaxy S7 and S7 edge phones, and make “significant changes” in its quality assurance processes to improve product safety.
Samsung posted earnings of $7.2 billion in the second quarter, with mobile profits - its biggest earner - soaring 57%.
The Note 7 debacle has come at an awkward time for South Korea’s biggest family-run conglomerate, which is in the middle of a leadership succession and is facing calls for a major restructuring from U.S. hedge fund Elliott Management.
Key to brand recovery would be rapidly finding out and communicating what went wrong with the Note 7, which was recalled when some devices were found to be combustible and finally discontinued when customers reported similar faults in their replacements.
The company blamed faulty batteries for the original problem but it has given no inkling about the cause of overheating in the replacements.
Samsung has announced financial incentives for U.S. and South Korea customers who exchange Note 7s for other Samsung products, as part of efforts to stem customer defections.
Reuters: Singapore Airlines said on Saturday it has banned Samsung’s Galaxy Note 7 mobile phones from all its flights and any passenger carrying one will not be allowed to board its planes.
The US Department of Transportation has issued an emergency order banning the devices from aircraft in the United States as of Saturday at noon EDT (1600 GMT).
Samsung Electronics Ltd. has recalled its flagship Galaxy Note 7 smartphones worldwide because of incidents of the phones emitting smoke or catching fire, dealing a huge blow to the company’s reputation.
Singapore Airlines said on its Facebook page that “the Galaxy Note 7 smartphone will be prohibited from being brought on board all our flights in person, in carry-on baggage or checked-in baggage with effect from 16 October.”
