USA TODAY International Edition
Tainted Samsung cuts forecast,
Samsung trimmed its profit forecast for the third quarter on Wednesday after confirming it no longer will manufacture the Galaxy Note 7 smartphone following reports the device overheated and caught fire.
The company forecasts third- quarter operating profit at $ 4.6 billion, down from its original guidance of $ 6.9 billion. The company revised down consolidated sales for the quarter to a range between $ 40.8 billion and $ 42.7 billion. The company reports thirdquarter results later this month.
If Samsung’s guidance holds, the third- quarter profit would be the lowest it has logged in two years.
Tuesday, Samsung announced it would kill off the Galaxy Note 7 line due to battery issues causing the phone to overheat and potentially catch fire.
The battery problems even plagued replacement phones issued during a recall last month involving 2.5 million devices.
“For the benefit of consumers’ safety, we stopped sales and exchanges of the Galaxy Note 7 and have consequently decided to stop production,” read a statement from Samsung on Tuesday.
The fiasco could not come at a worse time for Samsung, which faces increased competition in the smartphone space from Apple and now Google, which unveiled the Pixel smartphone, launching later this month.
Meanwhile, Samsung approaches a critical fourth quarter where many consumers will look to buy electronics during the holiday season. Despite the turmoil, Samsung still has a chance to turn it around, Gartner analyst Tuong Nguyen says.
“They should probably be OK overall as long as it’s an isolated incident and not indicative of something more inherent to the manufacturing process,” Nguyen says.