Samsung's Galaxy Note 7 fail is bigger than we thought

Josh Kim
October 26, 2016

Customers who exchange the Note 7 for a Samsung device will get a US$100 (RM422) credit, while those opting for an alternative brand will receive US$25 credit.

Samsung on Tuesday asked wireless carriers to stop selling its most expensive phone and instructed consumers to stop using them.

Samsung issued a global recall for the Galaxy Note 7 in early September after an internal investigation uncovered a risky battery design fault that was causing some users' handsets to spontaneously catch fire.

Samsung lowered its turnover forecast for July-September to around $42 billion, 4.09 percent less than its previous forecast and 8.94 percent less than what it collected in the third quarter of 2015. Revenue will be 47 trillion won instead of 49 trillion won.

On Wednesday the firm slashed its quarterly profit estimate by $2.3 billion to reflect the impact of the Note 7 withdrawal, giving some investors hope that the financial cost of the debacle had been largely accounted for.

Samsung has cut its preliminary figure for the third-quarter operating profit from 7.8 trillion won to 5.2 trillion won to factor in the direct costs of 2.6 trillion won from the Note 7 exit in the third-quarter earnings.

"In a release, the electronics manufacturer shared that it will increase its focus on improving product safety for consumers by enacting "significant changes" to its quality assurance process". Already pressure is mounting for the company to kill its troubled phone altogether.

The new information comes as the CPSC issues its second recall notice for the ill-fated Samsung flagship.

The replacement Note 7 phones with Amperex batteries were on sale within a week of the first recall.

In the United States, 1.9 million Note 7 phones are subject to the two recalls. According to the New York Times, after it acknowledged a problem with the Galaxy Note 7, Samsung took all the internal steps it deemed necessary to discover the root cause of the problems.

The Note 7 was one of the most expensive smartphones in the market with all the latest technologies, including the ability to unlock by scanning an iris.

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