Samsung sees 30% profits go up in smoke due to Note 7 fiasco

The ghosts of Samsung's Galaxy Note 7 fiasco loomed large as the company announced its third quarter earnings today.

Samsung's operating profits have gone down by 30% and net income slid by 17% compared to the previous quarter.

Samsung's Note 7 troubleshooting delays Galaxy S8 development by two weeks

When Samsung's Galaxy Note 7 was launched, it was expected to hold fort for the rest of the year and well into the first quarter of 2017 before Samsung's next-generation flagship phones arrived. However, with Galaxy Note 7 discontinued after Samsung's efforts to restore it's battery cell issues failed, the company now says that it may launch cheaper smartphones later this year to cover up for the catastrophe until the Galaxy S8 and Galaxy S8 Edge arrive next year. To prevent a repeat of much talked about battery issues, Samsung is rumoured to be on the lookout for third party battery suppliers for the upcoming flagships and these suppliers include its staunch rival LG Chem.

Samsung's efforts to wind down the noise generated by the Galaxy Note 7 controversy have so far included blocking parody videos on YouTube by staking copyright claims, drafting new compensation programmes in several countries and limiting battery life of existing Galaxy Note 7 devices to 60% to prevent mishaps. However, it seems that the Galaxy Note 7 issue, which the company estimated will cost it up to $5.3 billion, has rattled it so much that a major top management change is on the cards with Lee Jae-yong, the grandson of Samsung's founder Lee Byung-chull, expected to take over the reigns of the mobile division in the coming days.

Samsung limits Note 7 batteries to 60% to drive replacements

Samsung has, in the meantime, virtually re-launched the Galaxy S7 and S7 Edge phones by offering them with attractive discounts or with freebies like free Gear VR headsets. These two handsets garnered strong response in the first half of the year worldwide and while they may have surely drawn a few responses since the Note 7 was discontinued, Samsung's balance sheets didn't reflect them.

What saved Samsung was its components division which manufactures device components and accessories like OLED display, processors, SD cards and batteries for several other global giants and the division helped Samsung temper the losses caused by the Note 7 fiasco. The company now believes that the since the Galaxy Note 7 phase is over, its mobile division may return to show similar results in the following quarters like in previous quarters. It will, however, be interesting to see if customers worldwide will be as welcoming of Samsung's upcoming devices or if they'll opt for devices from other manufacturers in the short term.

Leave a Comment