14 DAY TRIAL // Samsung’s Galaxy Note 7 has been in the attention of financial analysts these past couple of days, after the company announced that the Note 7 would be discontinued. Now, Samsung has adjusted its profit estimations for the third quarter and some say that the company might ditch the Note brand altogether.
Last week, Samsung issued an earnings guidance suggesting that the Galaxy Note 7 recall wouldn’t have a massive impact on its earnings. Today, the company revised estimations, one day after announcing the discontinuation of the Galaxy Note 7.
Samsung’s operating profit in Q3 2016 is estimated at $4.6 billion, down 29.63% from the previous forecast, according to Korea Herald. In addition, revenue expectations are down to $41.8 billion. The phone maker reported its best profits in over two years during the second quarter of this year, after recording a massive success with the Galaxy S7 and S7 edge.
The costs of building another Galaxy Note premium brand are extremely high
The South Korean company seems to acknowledge the long-term damages that the Note 7 situation has brought to the company, while estimations for the Q4 aren’t expected to be optimistic either.
There are some analysts saying that Samsung might drop the Galaxy Note brand altogether, but that seems a bit unlikely. Kim Duk-jin, the vice chief of privately-run Korea-Insight Institute said that “Samsung is recommended to drop the Note brand as consumers may still find it dangerous even when the new Note 8 comes out.”
Samsung might retain the Galaxy Note brand simply because the cost of building another similar premium brand would be too high. That doesn’t mean that repairing some of its damaged reputation will be easy.
Analysts say that Samsung must first explain the issue that caused the Note 7 to catch fire and make sure that none of its other smartphones has the same fate. Some have said that the design of the phone could be the culprit, but nothing is certain until investigations conducted by Samsung, CPSC and South Korean officials end.