Samsung will burn through an additional $3 billion from Note7 woes

Having decided to consign the Note7 to a flame-proof dustbin Samsung has wasted little time in confessing the extent of its financial impact.

Scott Bicheno

October 14, 2016

1 Min Read
Samsung will burn through an additional $3 billion from Note7 woes

Having decided to consign the Note7 to a flame-proof dustbin Samsung has wasted little time in confessing to extent of its financial impact.

Two days ago Samsung revised its Q3 2016 earnings guidance to knock off $2.3 billion thanks to discontinuing the flaming phablet. It’s share price wasn’t at all affected by this revelation so Samsung thought it might as well lay some more grim news on investors, just to see what they do.

On top of the 2.3 bil on Q3 Samsung reckons it will take a similar sized hit in Q4 and even Q1 2017 won’t be outside the blast zone. All in all Samsung is expecting around a further $3 billion on lost profit in the coming quarter, taking the total burn to around $5.3 billion. Not bad for one dodgy battery and presumably Samsung SDI, which makes it, is no longer on Samsung Electronics’ Christmas card list.

Samsung shareholders are a funny bunch, however, not only taking all this catastrophic news in their stride but actually increasing the share price by around 5% since its nadir earlier this week. It can only be assumed that they were expecting even more punitive write-offs and are also relieved that Samsung has but a figure on the loss.

“Moving forward, Samsung Electronics plans to normalize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge,” said the Samsung announcement. “Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.”

The first of which may well be to issue a restraining order on Samsung SDI and all its employees.

About the Author

Scott Bicheno

As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno

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