Samsung: total Note 7 recall costs now $5 billion, cue 'significant' quality assurance changes


Apart from the direct cost of the Note 7 recall, which Samsung estimated on Wednesday to result in about a $2.3 billion slash in profit for the precious quarter, the company now issued another earnings guidance update, looking forward to the recall loss estimates for Q4 2016 and Q1 2017.

This current quarter it expects the discontinued sales to impact the bottom line in the mid-2 billion, with another billion added for the January-March period. This amounts to about a $5 billion writeoff in total for the double recall, or roughly two grand per Note 7 phablet. Granted, that's probably a top line estimate so that Samsung can insure itself against any unforeseen expenses, but it's still a pretty costly endeavor, wiping out two thirds of this quarter's operating profit in one fell swoop.

Therefore, Samsung is apparently determined not to let this happen again, and announced that it "will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes." Given the rumors that it is planning to announce a foldable phone by March, those QA changes better happen fast and furious, as we can only imagine how hard would this one be to manufacture compared even to the "symmetrical" Note 7 design. Meanwhile, Samsung said that it will try to fill the void left by Note 7 by ramping up production of the S7 and S7 edge models.

source: Samsung

Story timeline

Related phones

Galaxy Note7
  • Display 5.7 inches 2560 x 1440 pixels
  • Camera 12 MP (Single camera) 5 MP front
  • Hardware Qualcomm Snapdragon 820 4GB RAM
  • Storage 64GB, microSDXC
  • Battery 3500 mAh
  • OS Android 6.0 Marshmallow

FEATURED VIDEO

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.
FCC OKs Cingular's purchase of AT&T Wireless