Samsung estimates $3 bn losses over Note 7 withdrawal

Samsung estimates $3 bn losses over Note 7 withdrawal

Seoul, Oct 14 (IANS) South Korean tech giant Samsung Electronics has estimated that it will lose 3.5 trillion won ($3 billion) in operating profits over the next six months due to the withdrawal of the Galaxy Note 7 smartphone, the company said on Friday.

Samsung calculated that the impact of the sales halt will amount to 2.5 trillion won ($2 billion) in the fourth quarter of this year, from October to December, and around one trillion won ($880 million) for the quarter from January to March 2017, EFE news reported.

The firm first announced a drastic downward revision of its forecast for operating profits between July to September, from an expected growth of 5.5 per cent year on year to a 29.63-per cent fall from the same month in 2015. The final results of the quarter will be presented at the end of October.

Samsung Electronics was now planning to standardise its mobile phone business by expanding sales of models including the Galaxy S7 and the Galaxy S7 Edge, noting it will also introduce “significant changes” to its quality checking processes to “enhance safety for consumers”.

On Tuesday, the company announced it would freeze sales of its high-end smartphone and permanently cease production of the device over the persistent risk of spontaneous fires caused by defective batteries.

The South Korean conglomerate began selling the phone on August 19 this year, but in September announced an unprecedented withdrawal following reports of more than thirty cases of combustion by terminals in multiple countries.

In the recall affecting about 2.5 million phones, the company proceeded in mid-September to deliver replacement phones, but the new batch continued to suffer from battery overheating, ultimately resulting in the definitive withdrawal of the product.

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