Samsung To Lose $3 Billion Following Galaxy Note 7 Fiasco

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The Samsung Galaxy Note 7 seemed to be a real success for Samsung when it was first released, with critics and reviewers alike heaping praise on the device. However, things went into free fall for the South Korean firm when reports of the device exploding started to emerge. Samsung issued a worldwide recall, and after investigating, it came to a conclusion that the device packed a faulty battery produced by its subsidiary, Samsung SDI. The company then sent out replacement units with new battery packs, but those units were not safe either, and reports of explosions started popping up once again.

Now, with Samsung in a turmoil, and its Galaxy Note 7 phone no longer in production, the company has announced that it expects to take a hit to its profits. The company announced in a statement that it expects to take a hit of about $3 billion to its operating profits over the next two quarters. In the statement, Samsung expects to take a blow of 2 trillion won ($1.8 billion) during fourth quarter of 2016, and a blow of 1 trillion won ($900 million) during the first quarter of 2017. As for the third quarter of this year, the company expects to take a hit of $2.3 billion to its profit, after the Galaxy Note 7 fracas hit it. The total loss of the company is set to bet more than $5 billion, which is a forecast Samsung had mentioned in an earlier statement.

With the Galaxy Note 7 now out of the equation, and with affected customers being offered a Samsung Galaxy S7 Edge as a replacement, production of the Galaxy S7 Edge has been increased. This comes after it has been reported that most Galaxy Note 7 owners are now opting for a Galaxy S7 Edge, which packs similar internals to the Galaxy Note 7, but lacks the S Pen, iris scanner, Grace UX, and a few other things. With the sales of the Galaxy S7 Edge on the rise, Samsung is hoping to be able to make up for its lost profit with some help from the Galaxy S7 Edge. Additionally, the company will be focusing on enhancing product safety for its consumers by making significant changes in its quality assurance process in order to avoid such issues happening again, and they're also hoping to restore trust of consumers.

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