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Samsung has slashed its profit guidance by a third after its exploding smartphone disaster

Oct 12, 2016, 14:13 IST

AP

Samsung is slashing $2.3 billion off its profit guidance following its decision to stop selling the Galaxy Note 7 smartphone due to safety issues.

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On Wednesday, the South Korean electronics company cut its third-quarter operating profit guidance to 5.2 trillion won ($4.66 billion) from 7.8 trillion won - by a third.

Earlier this week, it announced that it was permanently halting production of the Note 7, after dozens of customers' devices exploded, caught on fire, melted, or started smoking uncontrollably - and multiple replacement devices issued to customers after a global recall were also affected by the same problems.

In a statement, the company said: "For the benefit of consumers' safety, we have stopped sales and exchanges of the Galaxy Note 7 and have consequently decided to stop production."

In a regulatory filing, Samsung also cut its July-September revenue estimate to 47 trillion won from the 49 trillion won it guided for last week.

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Samsung's stock plummeted on the news of the death of the Note 7 - wiping $18 billion off the company's market cap.

The smartphone was one of Samsung's most expensive, in its premium Galaxy line, and before the issues emerged it was very well received. But the unprecedented scale of the disaster - even a recall couldn't fix things - means that the phone will go down as one of the most catastrophic tech hardware disasters in decades.

If Samsung isn't careful, it could do serious long-term damage to the company's brand and reputation with consumers - negatively impacting potential sales for years to come.

($1 = 1,114.7500 won) (Reporting by Se Young Lee; Editing by Lincoln Feast)

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