Samsung Cuts Profit Forecast By A Massive $2.3b


The Galaxy Note 7 hasn’t worked out well for Samsung, and while we’re questioning whether it has treated its loyal buyers in the correct manner throughout the recall and cancellation debacle, it’s about to really feel the pain — in the wallet. Samsung has published a revised version of its earnings guidance, which anticipates how much it has earned over the past three months, and it has slashed expected operating profits by 33 percent.

This translates into a whopping $2.3 billion lost, compared to the figure it expected just five days ago, when it said operating profits would reach $6.9 billion. Now, it’s expecting $4.6 billion. Obviously still plenty of money, but losing a third in a week simply has to hurt. Samsung’s very clear about where the blame lies for this too. Unsurprisingly, it’s all the Galaxy Note 7’s fault.

Related: How to return your Galaxy Note 7

In its statement, Samsung says the revised earnings report comes after the company stopped sales and production of the Note 7, and it “reflects the impact of this decision on the third quarter earnings.” These figures are a guidance only, and the company will release its official earnings for the previous three months in the near future.

If that wasn’t upsetting enough for Samsung, its share price has also taken quite a hit since reports of failing Note 7 phones first began to spread. How much? Following the most recent decision to stop sales, exchanges, and to end production, the share price fell 8 percent. Think it doesn’t sound much? Data from Thomson Reuters says it’s equivalent to $18 billion. Add in the $2.3 billion Samsung will miss out on in its earnings, and the Galaxy Note 7 may end up costing $20 billion, without taking costs to develop, make, market, then recall and exchange the phone into consideration.

The financial impact of the Note 7’s failure is only now becoming known, but what about the long term effects due to reduced confidence from the people who buy Samsung phones? We’ll know more over the coming months, and after the Galaxy S8’s expected launch in 2017.

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