The Samsung Electronics (KRX:005930) of South Korea has issued a statement, where the business has slashed their profit forecasts by a third for the third quarter. The expected profits are now likely to be £3.8 billion or $4.6 billion, which is much lower than the original estimates.
Ironically, last quarter was the best one in two years for the company, thanks to the sale of the Galaxy 7. But this time, the business is in trouble for the same product.
The third quarter’s operating profit is now expected to be 5.2 trillion won or $4.6 billion, which is down by about 33 percent. Revenue expectations too have been reduced by 2 trillion. It now stands at 47 trillion or $41.8 billion.
This is the first time Samsung’s profits have declined in a year. In the third quarter last year, the business made a total profit of 7.39 trillion won. That was also the time when Samsung made a profit after two years of decline.
Battery Explosions Bad News for Samsung
Most analysts are however not surprised, as the company is in trouble after several of their Galaxy Note 7 smartphones exploded recently in the United States. One of them was in a domestic airline. The flight had to be evacuated after smoke was seen coming out from the phone. Samsung issued replacements and said they were all safe. But the replacement phones too started to explode, much to the embarrassment of the company.
The company initially withdrew all these phones from the market, and eventually had to stall the production of the Galaxy Note 7 smartphones as many had predicted would happen. 2.5 million of these phones had to be recalled after complaints that the batteries were exploding. Nobody is sure what is causing these explosions yet. But Samsung (KRX:005930) has ordered an inquiry into the matter.
Samsung Washing Machines Are Exploding Too
Earlier, there was trouble for the business, as there were complaints of Samsung washing machines exploding as well. A woman in the state of Kentucky reported that there was a bang and the machine virtually exploded. There was smoke everywhere, she said. There have been other reports of exploding Samsung washing machines too.
The Samsung stock has been going down consistently since last Friday. In the last few trading days, it has come down by about 10 percent, wiping off a lot of investor money.