[EQUITIES] Samsung’s Galaxy Note 7 recall costs surge to W2tr: Samsung Securities

[THE INVESTOR] Samsung Securities said on Oct. 12 that Samsung Electronics ’ recall costs for the Galaxy Note 7 smartphone could surge to 2 trillion won (US$1.80 billion), almost doubling from the earlier estimates.

The securities firm had estimated that the recall of 2.5 million Note phones could cost 1 trillion won in the fourth quarter. But it raised the figure, following the company’s ultimate sales and production suspension of the fire-prone flagship smartphone on Oct. 11.

Samsung Securities said the tech giant could see an additional profit losses worth 500 billion won from the halted sales of about 35 million Note phones in the rest of the year. Development costs and other expenditures are also expected to be worth about 500 billion won, the firm added. 

The firm estimated that Samsung’s operating profit next year could be down by 3.8 trillion won next year compared to this year if the unprecedented sales decline of the Note phone affects the sales of its upcoming Galaxy S8 smartphone that will be launched early next year.

By Lee Ji-yoon (jylee@heraldcorp.com)