Search results for

All search results
Best daily deals

Affiliate links on Android Authority may earn us a commission. Learn more.

Note 7 recall could cost more than $1 billion, as Samsung Q3 results loom

Analysts are estimating that Samsung's Q3 profits could fall by as much as 8.6 percent, if the Galaxy Note 7 recall costs exceed $1 billion.

Published onSeptember 22, 2016

samsung galaxy note 7 vs galaxy note 5 aa (4 of 22)

As expected, the Galaxy Note 7 recall is going to cost Samsung’s bottom line rather dearly. Ahead of the company’s third quarter financial results, analysts are estimating that the company’s profits could fall by as much as 8.6 percent compared to the previous quarter, having adjusted their estimates down following the Note 7 recall.

The consensus seems to have settled on a profit target of 7.4 trillion won ($6.7 billion) for the third quarter of the year. Initially, the company was predicted to generate a profit of between 8.2 and 8.5 trillion won for the quarter. Many had expected that the launch of the Galaxy Note 7 would see a continuation of strong profits following the successful launches of the Galaxy S7 and S7 edge in the second quarter. Samsung enjoyed a fresh two-year high for its profits in Q2, but now looks set to fall back to 2015 levels.

Looking more specifically at the company’s mobile division, Kwon Sung-ryul from Donbu anticipates that division’s operating profits will fall to 2.6 trillion won from his initial estimate of 4.1 trillion won.

Samsung Mobile Q3 16 profit forecast
After recalling the Galaxy Note 7, Samsung’s mobile profits are expected to fall back to early 2015 levels. The difference between Q3 pre and post recall analyst estimates are shown in red.

If accurate, this suggests that the Galaxy Note 7 recall could cost Samsung as much as 1.5 trillion won, or approximately $1.35 billion. This would be higher than the $1 billion that the recall has initially been expected to cost the company. There are also the knock-on effects for Samsung SDI and other component businesses to take into account when looking at the company’s overall business performance.

It isn’t all bad news for Samsung though. Analysts are expecting that the company’s fourth quarter performance will pick back up once the Galaxy Note 7 is back on the market. Reports also suggest that the company may expedite the launch of its Galaxy S8 smartphone in order to compensate for earnings lost with the Note 7.

You might like