Samsung estimates direct and indirect Galaxy Note 7 losses at $5.3 billion through Q1 2017
A “measly” $1 billion? As much as $17 billion? Just the $2.3 billion shaved off Samsung’s estimated operating profits for Q3? How about a “middling” $5.3 billion spread out over three quarters, through March 2017?
That’s probably a reasonable assessment of the short to mid-term negative impact of the Galaxy Note 7 discontinuation on the previously rosy financials of the world’s most popular (still) smartphone vendor.
In the long haul of course, it’s hard to say how much more Samsung might lose from fans running out of patience and trust in the once venerated brand, and undecided mobile enthusiasts likely shaking off the appeal of the existing GS7 and S7 Edge, as well as the upcoming S8.
For its part, the Korean OEM already did the public apology routine, offering incentives to devoted customers, and yet again ensuring the world it “will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes” going forward.
Back to the numbers, we should highlight Samsung allocated the full expected “direct cost from the discontinuation of Galaxy Note 7 sales” to its revised third quarter earnings guidance, with a “drop in revenue from discontinued sales” forecasted to “continue to have a negative impact on operating profit for the next two quarters.”
Specifically, Q4 profit losses are tipped in the “mid-2 trillion won range”, with an extra trillion or so squandered between January and March 2017. That’s a grand nine-month total of around 6 trillion Korean won, or USD 5.3 billion.
Source: Samsung Newsroom