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Samsung expects to lose an additional $3.1 billion due to Note 7 recall

Samsung expects to lose an additional $3.1 billion due to Note 7 recall


The cost of playing with fire

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Samsung says the Galaxy Note 7 discontinuation will cost it another $3.1 billion over the course of the next two fiscal quarters, following a significant reduction in its Q3 earnings guidance. The device, which has a chance of overheating and exploding, has been plagued with problems since its launch back in August. After recalling millions of devices thought to have battery issues, Samsung began issuing replacement Note 7s to customers around the world. However, numerous cases of those replacement units catching fire in the US over the course of the last week prompted Samsung to announce a worldwide recall of all devices and cease production permanently. The company still can't pinpoint the cause of the problem.

"The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision announced on October 11th, but expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters," reads Samsung's statement. "The negative impact is estimated in the mid-2 trillion won range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017." At current conversation rates, 3.5 trillion won translates to around $3.1 billion.