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Published: Fri, October 21, 2016
Economy | By Melissa Porter

Samsung flags $5.3bn profit hit from Note 7 failure

Samsung flags $5.3bn profit hit from Note 7 failure

The global consolidated sales estimate has also been lowered by 2 trillion Korean won ($1.7 billion) to approximately 47 trillion Korean won, after the company made a decision to permanently halt sales of the troubled Note 7 device, in less than two months after its launch.

To make up for the lost revenue, Samsung said it would expand sales of gadgets like the Galaxy S7 and S7 edge phones, and make "significant changes" in its quality assurance processes to improve product safety.

The South Korean tech giant said in a statement on Friday it expected the blow to profit to be in the mid-3 trillion won over the next two quarters - in the mid-2 trillion won range in the October-December period and about 1 trillion won ($900 million) for the first quarter of 2017.

While Samsung had unveiled the Galaxy Note 7 in July in India with a price tag of Rs 59,900, it delayed selling of the handset in India after cases of battery exploding while charging were reported in various countries. "This translates to Rs 6,457 crore in terms of revenues for the company", CMR said. The company received 13 reports of burns and 47 reports of property damage associated with the phones. However, it seems things didn't work out and the Korean company even recalled the replaced units, officially ending the Galaxy Note 7.

Samsung is still trying to figure out what caused some Note 7s to burst into flames.

In the recall affecting about 2.5 million phones, the company proceeded in mid-September to deliver replacement phones, but the new batch continued to suffer from battery overheating, ultimately resulting in the definitive withdrawal of the product.

It later insisted that all replaced devices were safe.

The problem with the replacements is still unclear.

Seeking to retain customers, Samsung is giving an incentive of a $100 credit to Note 7 owners who switch to another Samsung phone.

Samsung has laid out its detailed recall plans of the Galaxy Note 7 smartphones in the Chinese mainland on its official website on Thursday.

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