Note 7 fiasco could burn a $17 billion hole in Samsung accounts

samsung-note-7Samsung expects further blows to its profits from the withdrawal of the Note 7 phone, saying revenue will be affected in the first quarter of 2017.

The tech giant had already revised down its third-quarter earnings guidance.

On Friday, it said it expected an additional negative impact of around 3tn won ($3 bn, £2.2bn).

The Note 7 was recalled last month after battery fires, but when replacement phones experienced the same problem, Samsung scrapped the device.

The premium phone, launched in August, was meant to compete with Apple’s new iPhone 7 at the top end of the smartphone market.

According to a report by Reuters, Samsung Electronics’ (005930.KS) worst-ever recall could cost the company as much as $17 billion after it halted sales of its flagship Galaxy Note 7 for a second time, spelling an almost certain end for the ill-fated premium model.

If Samsung stops selling the Note 7s, that will translate into lost sales of up to 19 million phones that the firm was expected to generate during the Note 7’s product cycle, according to analysts. That would equate to nearly $17 billion in lost revenue, based on a Reuters calculation of the cost of the phones.That’s a big increase from $5 billion in missed sales and recall costs analysts initially expected Samsung to incur under the assumption that the firm would resume global Note 7 sales in the fourth quarter, according to report.

Chances of that now look slim. South Korea’s Hankyoreh newspaper, citing unnamed sources, said on Tuesday Samsung will likely stop Note 7 sales permanently. Samsung did not comment on the report.

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