Last month was pretty hectic for Samsung as it confirmed a battery cell defect in its latest smartphone, stopped selling it and then recalled all Galaxy Note 7 units it had shipped since launch. Analysts have estimated that the Galaxy Note 7 recall is going to cost Samsung more than $1 billion. The true financial impact of the recall won’t be visible until official figures are revealed by Samsung but analysts predict that the company might say that it still sees a small rise in Q3 2016 profit when the quarter’s earnings guidance is released later this week.
Some analysts have estimated that the cost of the recall and lost sales will be greater. They predict that cost associated with the recall, production of safe units and lost sales may translate into a nearly $5 billion hit for Samsung this year. If that is the case it would deal a major blow to Samsung Mobile’s sincere recovery efforts. This is why the slight increase in profit is attributed to the company’s other businesses. Its memory chip business will continue to pad the bottom line aided by rising demand from customers like Apple. The chips division is actually expected to report its highest quarterly operating profit in four quarters. Samsung’s display business is also expected to pick up some of the slack as the adoption of OLED displays increases because Chinese manufacturers like Vivo and Oppo are using them for their smartphones.
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