Profit growth? Not so fast, as Samsung revises Q3 earnings guidance to reflect Note 7 loss

It didn’t take a rocket scientist before, and it certainly doesn’t take one now, to foresee massive short-term financial damages, and even bigger ones incurred by the explosive Galaxy Note 7 in the long haul on the previously rosy records of the world’s largest smartphone manufacturer.

But everyone’s having trouble estimating just how bad things will get for Samsung as the chaebol regroups and tries not to repeat its as-yet unidentified mistakes in the lead-up to the Galaxy S8 launch next spring.

That includes the Korean tech giant itself, which grossly underestimated the impact of the first global Note 7 recall on third quarter earnings. Of course, in predicting a year-on-year profit surge last week, Samsung still expected the ill-fated phablet to bounce back, at least in part, thanks to a second batch of “safe-to-use” units then scheduled to roll out worldwide by 2016’s end.

In the meantime, the company’s worst nightmare materialized, forcing it to shave 2 trillion won off Q3 consolidated sales, and no less than 2.6 trillion off operating profit. That’s $1.8 billion and $2.3 billion respectively, bringing the overall numbers down to around $41.8 and $4.6 billion (47 and 5.2 trillion won).

So much for profit growth, seeing as how Samsung registered a 7.39 trillion won gain between the same months of July and September back in 2015. In fact, 47 KRW trillion sales and 5.2 trillion profit are the conglomerate’s worst scores since Q3 2014’s 47.45 and 4.06 trillion respectively. And you can probably expect lower digits for Q4 2016.

Source: Samsung Newsroom

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About The Author
Adrian Diaconescu
Adrian has had an insatiable passion for writing since he was in school and found himself writing philosophical essays about the meaning of life and the differences between light and dark beer. Later, he realized this was pretty much his only marketable skill, so he first created a personal blog (in Romanian) and then discovered his true calling, which is writing about all things tech (in English).