14 DAY TRIAL // Yesterday, Samsung Electronics and the CPSC announced the second recall of its newest flagship smartphone, the Galaxy Note 7. The company already discontinued production of the smartphone and is now working on retrieving all Note 7 units from their owners.
During the past few days, financial analysts estimated that the South Korean company could lose $17 billion following the Note 7 situation. However, the company issued a financial estimate for the fourth quarter of 2016 and the first of 2017 and it appears that things are not as severe as they seem.
Samsung announced that the discontinuation of Galaxy Note 7 sales would have a negative impact of about $3 billion in operating profit for the last quarter of this year and the first quarter of the next. The company mentioned that it already allocated the expected direct cost from Note 7 sales in the Q3 earnings guidance that it released a few days ago.
Samsung will be relying heavily on Galaxy S7 and Galaxy S7 edge sales
Samsung also expects the drop in revenue to have a negative impact on operating profit for the next two quarters. The negative impact is expected to reach about $2 billion in Q4 2016 and half of that in the first quarter of next year.
The phone maker also talked about plans for the future, mentioning that it intends to boost sales of its flagship smartphones, like the Galaxy S7 and Galaxy S7 edge. Additionally, it mentioned that it intends to enhance product safety for consumers by making major changes within the company, especially when it comes to quality assurance procedures.
We've reported recently that demand for Galaxy S7 edge smartphones has increased significantly, as many Note 7 owners tend to exchange their phones for this model.
Samsung also announced that it boosted production for the Galaxy S7, and it might also release a new color variant for the S7 edge, Blue Coral. The color has been very popular among Galaxy Note 7 owners and the company hopes it would convince many users to switch to an S7 edge this way.