Samsung reports sharp fall in profit on Galaxy note 7

TIL Desk/Business/Seoul-Samsung Electronics reported a sharp fall in its quarterly earnings today as the unprecedented recall and discontinuation of the Galaxy Note 7 smartphones wiped out its mobile profit. For the July-September period, Samsung’s net income was 4.4 trillion won (USD 3.9 billion), down 17 per cent from 5.3 trillion won a year earlier.

The company’s profit from its mainstay mobile business showed a dramatic decline due to the Note 7 recall. Samsung issued the world’s largest smartphone recall in September after the flagship smartphones caught fire or overheated. But it was forced to recall the smartphone again earlier this month before discontinuing the model altogether after its replacement phones that were supposed to be a fix for the fire-prone phone also combusted or emitted smoke.

The Galaxy Note 7, initially launched as Samsung’s weapon to kill the iPhone, was scrapped in less than two months. Samsung’s troubled mobile business generated just 100 billion won (USD 87.9 million) in operating income during the quarter, compared with 2.4 trillion won one year earlier. Samsung’s mobile business usually contributes more than half of its overall income. It is the world’s largest smartphone maker.