Financial Fallout of Samsung Recall Forces Smartphone Maker to Slash Profit Forecast
Samsung was faced with a financial hit of $1 billion when its original run of Note7 devices were recalled due to exploding batteries. That impact has more than doubled now that Samsung has discontinued the line entirely after replacement models were found to still be exploding.
Today Samsung slashed its quarterly profit estimate by a third, pegging the fallout north of $2.3 billion. Samsung shares are down 10% this week. The company is considering a dividend or buybacks to calm fretting investors. Net revenue loss from discontinuing the company’s flagship device could reach $17 billion, experts forecast.
Beyond immediate financial implications, analysts are concerned about long-term damage to Samsung’s reputation as the leading Android device maker—especially now that Google has re-entered the fray with its Pixel handsets.
Samsung has not yet commented on what actually caused its smartphones to overheat and explode.
