Samsung Electronics announced today that it estimates that the stop production of the Samsung Galaxy Note 7 will generate a negative impact of approximately Won mid-3 trillion in operating profit from the fourth quarter of 2016 through the first quarter of 2017.
Total direct estimated dammage at around Won 5 trillion
The negative impact is estimated in the Won mid-2 trillion range for the fourth quarter of 2016 and at approximately Won 1 trillion for the first quarter of 2017.
The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision announced on Oct. 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.
The negative impact in sales for the 2ndQ this year was estimated by the South Korean multinational at Won 2 trillion (from Won 48 ~ 50 trillion to Won 46 ~ 48 trillion). The reduction in the operating profit was calculated by the company over the Won 2 trillion (from Won 7.7 ~ 7.9 to Won 5.1 ~ 5.3).
The figures provided by Samsung today do not include the impact in brand value derived from the whole issue.
New strategical bet on the Galaxy S7 range and change in the quality control protocols
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.
Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.
Image over the headline.- A customer tries to see how fast the Galaxy Note7’s camera can capture the moment for himself. © Samsung.
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