Samsung says Note 7 recall to cost another $3 billion
- by Enrique Stewart
- in Technology
- — Oct 20, 2016
"The negative impact is estimated in the mid-2 trillion won (around S$2.44 billion) range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017", the South Korean electronics giant said in a statement.
This amounts to a total predicted loss of US$5.3 billion over the death of Samsung's problematic arson-prone Galaxy Note 7 smartphone.
Samsung shares, which have fallen about eight percent this week, edged up 0.6 percent as of 0228 GMT on Friday, versus a 0.5 percent gain on the broader market.
Samsung added that it will make significant changes in its quality assurance processes to improve product safety.
Song Myung-Sup, an analyst at Hi Investment & Securities, said the impact would be felt for many quarters to come.
"The safety of our customers is our first priority, which is why we are taking this further step and extending the current recall to all Galaxy Note7 devices, including replacement Galaxy Note7 devices", Samsung vice president IT & mobile, Richard Fink said. "It is hard to measure such impact".
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Samsung Electronics on Wednesday slashed its latest quarterly profit estimate by one third in the wake of a highly damaging recall crisis that ended with the scrapping of its latest flagship smartphone. Samsung also recalled about 200,000 phones in China and about half a million phones in South Korea.
Koh Dong-jin sent on Tuesday an email "A letter to our executives and staff members", saying that the company will carry out an in-depth investigation into its devices and take the best course of action for its customers.
If you decide you're done with the Samsung brand, the company will still give you some money back for switching to another brand, although it'll only be $25.
Samsung has announced financial incentives for USA and South Korea customers who exchange Note 7s for other Samsung products, as part of efforts to stem customer defections.
The company blamed faulty batteries for the original problem but it has given no inkling about the cause of overheating in the replacements.
