Samsung Reduces Profit Forecast Due To Galaxy Note 7

Samsung Logo 2016 AH 16

After what started off as an incredible year for Samsung with the success of the Galaxy S7 and Galaxy S7 Edge, the company’s fall from grace couldn’t have been more dramatic. With the launch of the Galaxy Note 7, many were saying that it was the best smartphone ever made, though eventually reports of fires started surfacing and the company was forced to recall the device.

Last week, Samsung announced its Q3 2016 operating profit forecasts, which were still high at 7.8 trillion won (roughly $7 billion). Unexpectedly, though, since it announced its forecasts the giant has been forced to recall the Galaxy Note 7 once again. Now, the company has issued a profit adjustment and this time the effects of the high-end device appear to be showing. The new forecasts predict profits of $5.2 trillion won ($4.6 billion), which represents a huge decrease of 33 percent over last week’s predictions. As well as this, Samsung has also said it expects revenue to come in at the equivalent of $41.8 billion, down from the original prediction of $44 billion. This decrease in both revenue and profit will mean Q3 2016 will be the first year-on-year decline for the company since Q2 2015 and come just after the company produced its best profits in over two years in Q2 2016. The decline in profits may also signal the beginning of a period of struggle for the company, in order to regain consumer trust and, more importantly for the company, profit.

Although for Samsung the news couldn’t be any worse, it’s clear that other manufacturers such as LG, Apple, and even Google will be doing their best to take advantage of the situation. With Apple’s recently launched iPhone 7 line the company is sure to be a tempting option for many disgruntled Samsung customers, while LG and Google’s new V20 and Pixel XL offerings respectively are sure to grab at least a handful of Galaxy Note 7 customers looking for a new high-end Android device. Regarding what Samsung should do now, concentrating on replacing all Galaxy Note 7 devices, as well as getting down to the problem, would be a wise decision in order to make sure history doesn’t repeat itself when the eventual Galaxy S8 launches next year.