Samsung had a record-breaking Q2 this year aided by the stellar performance of the Galaxy S7 series. The company was hoping to continue that momentum in Q3 with the Galaxy Note 7 but it all went south when battery cell defects in its new flagship were confirmed and Samsung had to halt sales and issue a recall. The financial impact of the Galaxy Note 7 debacle will be truly unveiled when Samsung provides official numbers, the company is going to release its Q3 2016 earnings guidance on October 7.
Analysts believe that the Galaxy Note 7 recall is going to cost Samsung 1.2 trillion won ($1.08 billion). It was unable to sell the flagship throughout the month of September and is only now gradually resuming sales of the Galaxy Note 7 across the globe. The market expects Samsung to post an operating profit of 7.62 trillion won which would be an increase of 3 percent from the same quarter last year. Overall revenue is expected to be down 1.6 percent from the same time last year at 50.85 trillion won.
Prior to the recall analysts had estimated that Samsung would post sales of 8 trillion won or more as the Galaxy Note 7 was predicted to do very well. Not being able to sell its flagship device for an entire month is obviously going to make a dent on its balance sheet. Nevertheless, the conglomerate’s earnings are expected to receive a boost from its display and semiconductor business which have remained strong over the past few quarters.
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