Galaxy Note 7 fiasco leaves Samsung mobile profits a smoldering ash pile

Posted:
in General Discussion edited October 2016
As expected, the Galaxy Note 7 disaster set fire to Samsung's operating profits in the September quarter, with the company's mobile unit posting a 96 percent decline to 100 billion Korean won (about $87.9 million) as compared to the same time last year.




Samsung reported net operating profits of 5.2 trillion won for the third quarter, down 30 percent from 7.4 trillion won in the year ago period. Revenues plunged from 51.7 trillion won in 2015 to 47.8 trillion in the most recent quarter, a negative 7.5 percent change.

Of note, Samsung's mobile unit managed an anemic 100 billion won in operating profit, down from 2.4 trillion won in the year ago quarter. By comparison, Samsung earned 4.32 trillion won for the three months ended June. The result marks the lowest quarterly watermark for the Korean tech giant's mobile arm since the first Galaxy device launched in 2009.

For investors, the plunge in profits was expected, as Samsung cut estimates by $2.3 billion earlier this month in anticipation of blowback from the Galaxy Note 7 debacle.

Referred to as the "Note 7 issue" by Samsung, problems cropped up shortly after the phablet device launched in August. Reports of explosions and fires initially surfaced in South Korea and spread to international launch countries, including dozens of incidents in the U.S. Later that month, Samsung halted shipments of the fiery device and issued a voluntary global recall of some 2.5 million devices.

The company worked to rectify the problem, thought to be related to the phone's battery or charging mechanism, but replacement units deemed safe for use ended up suffering the same fate as the original. Samsung officially halted sales and replacements of all Note 7 products on Oct. 10, and announced a permanent discontinuation of the line a day later.

In search of a silver lining on the Note 7 mushroom cloud, Samsung reminded investors that Galaxy S7 sales remain "solid" as shipments of mid- to low-end handsets continue to grow.

Comments

  • Reply 1 of 15
    This will likely not be the end of declines over this issue.
    watto_cobramagman1979
  • Reply 2 of 15
    Karma's a bitch
    Mal_Rwatto_cobrairelandmagman1979jbdragoncornchippscooter63
  • Reply 3 of 15
    fallenjtfallenjt Posts: 3,850member
    Hit them hard.
    watto_cobramagman1979
  • Reply 4 of 15
    I'll have a pint to that.
    watto_cobramagman1979
  • Reply 5 of 15
    gtrgtr Posts: 3,231member
    It couldn't have happened to a nicer company...
    watto_cobrapeterhartjbdragon
  • Reply 6 of 15
    Thats thermonuclear to you ;-)
    watto_cobramagman1979jbdragon
  • Reply 7 of 15
    tyler82tyler82 Posts: 686member
    I prefer to buy from American companies. 

    Korea can keep their Samsungs and their Kias. 
    watto_cobramagman1979jmey267cornchip
  • Reply 8 of 15
    Apple is not so American anymore. 
  • Reply 9 of 15
    tyler82 said:
    I prefer to buy from American companies. 

    Korea can keep their Samsungs and their Kias. 
    How much of any phone including the iPhone  consists of USA made parts? Compounding, this  most of the profit is parked outside the USA.
  • Reply 10 of 15
    irelandireland Posts: 17,290member
    tyler82 said:
    I prefer to buy from American companies. 

    Korea can keep their Samsungs and their Kias. 
    How much of any phone including the iPhone  consists of USA made parts? Compounding, this  most of the profit is parked outside the USA.
    Most profit for Apple is also made outside the USA.
    netmagemagman1979
  • Reply 11 of 15
    lkrupplkrupp Posts: 6,167member
    sog35 said:
    And yet Samsung's stock is doing better than Apple
    That’s because Samsung is diversified to the hilt. If this had happened to Apple they would be burning through their of cash big time and might never recover. The tech press and general news media was somewhat hard on Samsung but imagine what carnage they would be heaping on Apple. It would be relentless and vicious.
    watto_cobracornchip
  • Reply 12 of 15
    maestro64maestro64 Posts: 4,168member
    This is all smoke and mirrors, the Note 7 issue did not show up until the end of the quarter for them and they did not make the decision to shut the program down until Oct. How did future losses affect their most recent quarter. If they did that bad last quarter it had nothing to do with the Note 7 issue they must have had issue other than this.
    jmey267cornchipcali
  • Reply 13 of 15
    calicali Posts: 3,495member
     Someone on the forum worded it nicely it was something like: 

    "Dear Lord we doubted you during troubling times please forgive us for you work in mysterious ways!"
  • Reply 14 of 15
    calicali Posts: 3,495member
    maestro64 said:
    This is all smoke and mirrors, the Note 7 issue did not show up until the end of the quarter for them and they did not make the decision to shut the program down until Oct. How did future losses affect their most recent quarter. If they did that bad last quarter it had nothing to do with the Note 7 issue they must have had issue other than this.
     I'll have a pint to this! 
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