Samsung Revises Down Q3 Profit Forecast Following Galaxy Note 7 Hit

Samsung Electronics has revised down its Q3 profit forecast due to the scrapping of its Galaxy Note 7 smartphone.

The company now expects Q3 profits of 5.2 trillion won ($4.7 billion), which is a third lower than its original estimate of 7.8 trillion won.

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

Ahead of the profit warning, the South Korean company’s shares fell 0.8% on October 12.

That added to October 11 8% fall.

Samsung has seen more than $20 billion wiped off its market value in two days.

Its shares have fallen on concerns that the current crisis will go beyond the costs of the recall and affect the brand’s overall reputation.

According to analysts, the Note 7 crisis could cost Samsung in the long run, particularly coming just as rivals, such as Google and Apple, have announced new high-end smartphones.

The Galaxy Note 7 had been seen as the main rival to Apple’s new iPhone 7 model. Samsung’s woes have sent Apple’s shares to a 10-month high.

Last month, Samsung recalled around 2.5 million Galaxy Note 7 phones after complaints of exploding batteries.

The company later insisted that all replaced devices were safe. However, that was followed by reports that those phones were catching fire too.

On October 11, Samsung said it would permanently cease production of the device and urged owners to turn it off.