After projecting a 5% year-over-year increase in its Q3 2016 operative earnings last week, Samsung has now revised its forecast following the global recall and discontinuation of its problematic Galaxy Note 7 phablet. The Korean tech giant has slashed its quarterly profit estimate by a third, bringing projected operating profits to $4.7 billion, down from the initial estimates of close to $7 billion. Samsung also cut its Q3 2016 revenue estimate from $43.5 billion down to $41.7 billion.
The company's revised earnings guide represents a 29.63 percent decline in operating profit, compared to Q3 2015, and a 36.12 percent decline from Q2 2016. Marketing experts are now suggesting that Q4 could also bring additional negative impacts on Samsung's profits, but they likely won't be as large as those from Q3:"I think it's possible for fourth-quarter profits to come in as much as the high 7 trillion won [$6.2 billion] range,”
Park Jung-hoon, a fund manager at HDC Asset Management, told Reuters.
Following two recalls of a total of 2.5 million Note 7 units, and the news for the smartphone's discontinuation, Samsung shares plummeted 10 percent this week, experiencing a further 0.7 percent drop Wednesday morning.
The global recall of Samsung's latest phablet was triggered by dozens of reports of units catching fire or exploding. The reasons for so many devices malfunctioning are still unclear, but Samsung is reportedly investigating the matter.