Samsung's Q3 operating profit for the IT and mobile communication division declines 96%

Samsung's Q3 operating profit for the IT and mobile communication division declines 96%
Samsung Electronics released its third quarter earnings on Thursday morning. Revenue amounted to the equivalent of $41.9 billion USD, a decline of 7.5% year-over-year. Operating profit came to the equivalent of $4.5 billion USD during the the three month period ended in September. That worked out to a 30% or $1.89 billion USD decline from last year's Q3. Pre-tax profit for the quarter declined 19% year-over-year, and net profits were 17% lower.

The IT & Mobile Communications Division was negatively impacted by the first official recall of the Samsung Galaxy Note 7. As the quarter came to an end, Samsung was in the process of exchanging the original Galaxy Note 7 units for the replacement phones. After the quarter ended,we started hearing about replacement units exploding. Things started going downhill after a replacement Galaxy Note 7 exploded on the floor of a Southwest Airlines plane that was boarding passengers. Operating profit in this category amounted to $87.1 million USD, down 96%  from last year's figures thanks to the Galaxy Note 7.

Operating profit improved in the components business sequentially thanks to improved sales of flexible OLED panels. But this business suffered a decline year-over-year because of a drop in DRAM prices. Components are expected to perform very well in the fourth quarter compared with last year's fourth quarter. Operating profits for mobile devices next quarter should rise to the level reached during Q4 of 2015. Sales will be led by the Samsung Galaxy S7 and Samsung Galaxy S7 edge.

For 2017, Sammy expects to profit from strong sales of new flagship models. Despite a two-week delay in developing the Samsung Galaxy S8 while the Galaxy Note 7 explosions are investigated, Samsung could still unveil its new flagship phone on February 26th. As has been the case recently, that unveiling will take place the very day before the MWC in Barcelona opens.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy said that the decision to shut down the Galaxy Note 7 production will not have much of an effect on fourth quarter numbers because the phablet would have represented just a small portion of Samsung's overall device sales. Another analyst, Mehdi Hosseini at Susquehanna Financial Group, said that Samsung will use the display on the Galaxy S8 to differentiate its new flagship phone from the competition.

Early reports say that Sammy's new flagship will sport a UHD screen featuring a resolution of 2160 x 3840. For the second half of 2017, Hosseini expects Samsung to introduce foldable displays.
 
source: Samsung via CNBC

Related phones

Galaxy Note 7
  • Display 5.7" 1440 x 2560 pixels
  • Camera 12 MP / 5 MP front
  • Processor Qualcomm Snapdragon 820, Quad-core, 2150 MHz
  • Storage 64 GB + microSDXC
  • Battery 3500 mAh

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23 Comments

1. strawhat67

Posts: 67; Member since: Jul 16, 2015

Thanks to Note 7

2. IronTech

Posts: 153; Member since: May 27, 2016

PA at finest. Lol

9. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

But this is also a classic example of "No one stays on top forever". This is bound to happen, to Samsung or anyone, who knows how long the next top manufacturer will last there. Nokia went down, HTC never went up, Samsung is going down, HTC still not going up. Lol.

11. truthwins unregistered

Samsung mobile division is on the verge of extinction

13. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Downfall? Yes... Extinction? No way.

18. IronTech

Posts: 153; Member since: May 27, 2016

Remember? General Motors have had many recalls yet they are still thriving. I'm sure Samsung will pick themselves up, dust themselves off, and follow suit.

3. pongkie

Posts: 663; Member since: Aug 20, 2011

karma

4. NoToFanboys

Posts: 3231; Member since: Oct 03, 2015

I can hear groaning from a distance.

5. Unordinary unregistered

Over reacting. They will recover and do great

6. Tyrion_Lannister unregistered

I'm fearing they won't. They usually change the areas they are already good at. Samsung is really bad at adapting or changing the real pain points of their phones. It's been years since touchwiz is performing poorly. Yet, they always patch this every iteration rather than blowing the crap out of it and creating something from scratch. Same can be said about performance. I fear that they will take more stupid actions such as making a 4k screen and participating in meaningless spec wars rather than the experience of owning a phone. I don't want to pay more for stupid features only 1% of people will appreciate like 4k screen or VR or stupid iris scanner. That money can be spent into a better UI, camera or performance which everyone will benefit from. I'm all in for extra features and firsts in 600$+ phones, because that's the point. But I want those extra features to be useful, not gimmicks or niche. Take the example of iPhone 7/7+. The extra money over android phones gives you extra performance, app quality, better ecosystem and efficiency. On the other hand, Samsung phones are the same as other 500 billion android phones, just with more marketing and worse UI. Call me a hater if you will, But I'm just pointing out my opinion based on the past. And I would love to be proved wrong, but I know I won't be. Samsung will disappoint again like they have done after the S6.

19. nokia12

Posts: 610; Member since: Nov 19, 2013

I agree with you on touchwiz UI, apps smoothness and all your other points but 4k screen for VR is not a stupid feature at all and no it will not be used by 1 % of people... The mindless spec war for high ppi race ended with 2k screens... This is why we don't have a 4k screen yet.. only sony did it .. and rest of the manufacturers didn't participate Samsung bringing 4k in phones is very practical and A VERY VERY Badly Needed move right now.. From next year VR is going to be very big .. and i am not talking about games .. it will be Movies and Netflix that will make VR a big success on mobile phones.. it has been held back only because of lower resolution till now.. once that gets fixed wait and see how VR will gain mass adoption.. The ability to watch Movies and Tv shows on a giant screen in a personal virtual Imax like theatre is a very very big feature if it is done right..

20. Tyrion_Lannister unregistered

VR is not going to be big at all. At least not mobile VR. Vive and Oculus rift are the real VR headsets. I don't want to compromise the battery life and cost of my phone just for VR. Not to mention performance. If I want to experience VR, I will just get an HTC vive, or a standalone VR headset. People who buy 800$+ phones are not poor ones that can't afford VR headsets. So don't even try to bring up that point.

21. nokia12

Posts: 610; Member since: Nov 19, 2013

You are not going to compromise too much of the battery life or performance as it will run in 1080p mode for normal scenarios and not in 4k mode... ofcourse there will still be some hit in battery life due to 4k physical resolution but it won't be massive.. Z5 premium did ok and samsung would do even better with amoled HTC Vive and rift are the real headsets but they are "primarily" for gaming so only gamers would buy that not your average customer .. not to mention there is not much difference in quality between rift/vive and Gear VR for movie experiencing... check reddit owner reviews This is why Mobile VR for movies and Tv shows is going to be even bigger than those high end HMDs simply because of cost and all in one device , portability factors.. Vr is going to be big with added push from google daydream whether you like this feature or not it is here to stay in a big way.. as 4k screens phones start getting cheaper under 500 $ .. in 2 years that cost would come down to 300$.. if you don't like it, don't use it but don't say it is a gimmick feature ..

8. trojan_horse

Posts: 5868; Member since: May 06, 2016

^^ Lol coming from you? Is that really you, Unordinary? Last I checked, you were pleased with this misfortune happening to Samsung... how come you're suddenly a sort of "Samsung apologist"? Wow.

10. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

I think you're confused with Ordinary and Unordinary.

23. Unordinary unregistered

Just because I find humor in the Note 7 fiasco doesnt mean Im stupid enough to think the ship is going to sink.

7. HugoBarraCyanogenmod

Posts: 1412; Member since: Jul 06, 2014

Apple profit slump PA headlines : Apple sell record devices Samsung profit slump PA headlines : Samsung mobile division plummet 96% (despite the rest is climb)

12. ibend

Posts: 6747; Member since: Sep 30, 2014

as I remember, PA write something like "Apple revenue surpass expectation" while the truth is "iPhone sales continue to shrivel in Apple's fiscal fourth quarter" (just like techreport headline say) but yeah, they sugarcoating too much...

14. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Which fruity flavor I wonder...? XD

15. cnour

Posts: 2305; Member since: Sep 11, 2014

Hopefully the end of this copying company in smartphone world is close.

16. shadad

Posts: 22; Member since: Oct 28, 2014

LOL when i compared this article to the one on CNBC its different. On PA i felt Sam going like Nokia. Wait! who wrote the article? Alan F! Ok..now that explain a lot XD

17. ebilcake

Posts: 1231; Member since: Jul 16, 2016

This won't change anything for consumers. There is no point over analyzing it, they will recover next year when the Galaxy S8 gets released. Those saying this is the end of their mobile division need a reality check, most of the major Android manufacturers are barely making any money from their phones, Samsung have one bad quarter due to a recall and it's now it's about to under? Okay......

22. jeroome86

Posts: 2314; Member since: Apr 12, 2012

A tech expert said this info is false. What's the real deal PA?

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