Exploding Galaxy Note 7 Smartphones Do Little To Slow Samsung Profit Train
It's a good thing Samsung doesn't only sell smartphones, lest it could have been looking at a bleak earnings report for its fiscal third quarter. Instead, the South Korean electronics maker saw its profit grow by 5.6 percent, higher than what analysts had estimated, as its other businesses picked up the slack from its Galaxy Note 7 troubles.
Samsung had to issue a global recall of its Galaxy Note 7 phones after it was discovered that the batteries it was using were prone to overheating and catching fire. There were several reports of exploding Galaxy Note 7 devices causing personal and property damage, such as setting ablaze a Jeep Grand Cherokee in one instance.
Early estimates had Samsung taking a $1 billion as a result of its recall, and investors reacted by sending its stock spiraling downward. Samsung didn't say how much it ended up costing them to date, though in a brief filing today, it said its operating profit for the July through September period was likely to be 7.8 trillion won (around $7 billion in U.S. currency). That's up from 7.4 trillion won a year ago.
Samsung also said it expects to report revenue 49 trillion won when it issues a full earnings report in October. If so, that would be a 5.2 percent drop for the quarter, which is also less than analysts had expected.
The results include Samsung's Galaxy Note 7 debacle, but stellar performance in its semiconductor and display businesses helped the company weather the storm. That's a good sign for Samsung, especially after a replacement Galaxy Note 7 device recently went up in smoke on a grounded Southwest Airlines plane. Depending on how that situation works out, there might be no saving Galaxy Note 7 sales. However, it doesn't look like Samsung itself will need saving.
Samsung had to issue a global recall of its Galaxy Note 7 phones after it was discovered that the batteries it was using were prone to overheating and catching fire. There were several reports of exploding Galaxy Note 7 devices causing personal and property damage, such as setting ablaze a Jeep Grand Cherokee in one instance.
Early estimates had Samsung taking a $1 billion as a result of its recall, and investors reacted by sending its stock spiraling downward. Samsung didn't say how much it ended up costing them to date, though in a brief filing today, it said its operating profit for the July through September period was likely to be 7.8 trillion won (around $7 billion in U.S. currency). That's up from 7.4 trillion won a year ago.
Samsung also said it expects to report revenue 49 trillion won when it issues a full earnings report in October. If so, that would be a 5.2 percent drop for the quarter, which is also less than analysts had expected.
The results include Samsung's Galaxy Note 7 debacle, but stellar performance in its semiconductor and display businesses helped the company weather the storm. That's a good sign for Samsung, especially after a replacement Galaxy Note 7 device recently went up in smoke on a grounded Southwest Airlines plane. Depending on how that situation works out, there might be no saving Galaxy Note 7 sales. However, it doesn't look like Samsung itself will need saving.
