Note 7 Recall Will Cost Samsung More Than $5B

Company aims to expand sales of less fiery phones
By Newser Editors and Wire Services
Posted Oct 14, 2016 1:18 AM CDT
Note 7 Recall Will Cost Samsung More Than $5B
A visitor tries the Galaxy S7 Edge smartphone at a store in Seoul, South Korea.   (Lee Jin-man)

Samsung says the discontinuation of the Galaxy Note 7 will cost the company about $3 billion during the current and next quarters, bringing the total cost of the recall to at least $5.3 billion. The Note 7 discontinuation will cost more than $2 billion during the October-December period and another $884 million during the January-March quarter, the company said in a statement Friday, per the AP. Samsung already slashed its third-quarter profit forecast by $2.6 billion earlier this week, an amount that could wipe out its entire mobile business profit. That did not include the cost of Samsung's first recall, which analysts estimated at up to $1.6 billion.

Samsung has enough cash and other businesses to absorb the shock from the phone recall. The company says it expects to generate $4.6 billion in operating income during the third quarter after the recall cost. Analysts say most of the income will be generated by sales of advanced displays and semiconductors. Samsung says it will expand sales of two other smartphones released in spring this year, the Galaxy S7 and Galaxy S7 Edge, quashing rumors that it may try to release updated versions of those devices. (This writer says Fight Club inspired him to keep his Galaxy Note 7, despite the fire risk.)

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