Samsung Forecasts Record Q4 Profit Despite Explosive Galaxy Note 7 Saga

Things were looking pretty grim for Samsung when it threw in the towel and issued a global recall for its fire prone Galaxy Note 7 devices after failing to fix the problem with an initial round of replacements. Despite the setback, Samsung reported preliminary fourth-quarter operating income of 9.2 trillion won (around $7.8 billion in U.S. currency), a 50 percent jump from the same quarter a year ago and its largest profit in three years.

The unlikely turn of events in Samsung's bottom line is the result of the South Korean electronics maker having a robust mobile lineup and is especially attributable to its flagship Galaxy S7 and Galaxy S7 Edge handsets. Those two phones helped Samsung weather the storm and expense of having to recall a major product.

Samsung Galaxy Note 7

"Despite the Note 7’s vacuum, Samsung acquitted itself well on the back of sound S7 sales," Lee Seung-woo, an analyst with IBK Securities Co., told Bloomberg. "After a softer landing in the first quarter, Samsung is on track for record June quarter profit with the new S8 coming to market."

Samsung had a big problem on its hands when reports started surfacing of Galaxy Note 7 handsets overheating and catching fire. Before long Samsung was shuffling around trying to collect the devices and swap them out for replacement models that came equipped with a different battery. Those handsets proved faulty as well, forcing Samsung to issue a global recall and chalk the Galaxy Note 7 up as a lost cause.

Though the Galaxy Note 7 was a costly mistake, Samsung reported consolidated sales of around 53 trillion won (~$44.3 billion) for the quarter. That would put its full year sales at 201.54 trillion won (~$158.3 billion), resulting in a profit of 29.22 trillion won (~$24.4 billion).

Samsung stock rose close to 2 percent following news of the forecast. At the time of this writing, its share price is up 1.8 percent at 1.8 million won (~$1,510).