Samsung Electronics has announced that its profit in Q4 of 2016 surged 50% despite the fiasco with its flagship Note 7 phone.
Analysts had expected the company’s profits to surge thanks to its mainstay semiconductor business, but the result surpassed even the most optimistic forecasts. The semiconductor division cashed in on strong demand and a tight supply for microchips during the September-December period, likely contributing to more than half of its quarterly earnings.
The earnings estimate would mark Samsung’s highest quarterly profit since 2013.
In October 2016, the world’s largest smartphone maker had to scrap the Note 7 after batteries caught fire and even replacement devices went up in smoke.
Samsung said it expected to post 9.2 trillion won ($7.8 billion) in operating profit for the months from September to December.
In an earlier profit forecast for the fourth quarter, Samsung had said it expected the Note 7 recall would mean a $2.1 billion hit to their profits.
Samsung first issued a recall for the Galaxy Note 7 in September following complaints about exploding batteries.
After replacement devices deemed safe were also found to overheat and catch fire, Samsung scrapped the phone entirely.
The company said that it will “very soon” share details of its inquiry into the cause of the Note 7 problems.
Samsung will disclose a detailed earnings release for Q4 of 2016 in late January which will give more insights into the performance of its individual businesses.
Samsung has reportedly stopped production of the Galaxy Note 7 smartphone amid claims that replacement devices still have critical battery issues.
Reuters and Yonhap cited unnamed officials claiming Samsung had temporarily halted its Galaxy Note 7 production lines.
The move came as two the AT&T and T-Mobile networks stopped replacing or selling the Note 7.
On October 3, Samsung said it would also stagger shipments of the Note 7 to conduct in-depth inspections.
The South Korean tech giant issued a recall of the Galaxy Note 7 in September and assured customers last month that the fixed devices were safe.
However, there have now been several reports of replacement phones starting to emit smoke.
It comes after the AT&T and T-Mobile networks in the US said they would no longer replace the devices, while the latter said it would halt all sales of the phone.
“While Samsung investigates multiple reports of issues, T-Mobile is temporarily suspending all sales of the new Note 7 and exchanges for replacement Note 7 devices,” T-Mobile said on its website.
Meanwhile, AT&T said: “We’re no longer exchanging new Note 7s at this time, pending further investigation of these reported incidents.”
It advised customers to exchange them for other devices.
Samsung said in a statement last month that the issue of overheating was caused by a “rare” manufacturing error that resulted in the battery’s “anode-to-cathode [negative and positive electrodes]” coming into contact.
But last week, a domestic flight in the US was evacuated after a replacement Note 7 started emitting smoke in the cabin. And a man in Kentucky reportedly woke up to a bedroom full of smoke from a replaced Note 7.
In an update on October 9, Samsung said it understood the concerns of carriers and consumers about the newly released replacement Note 7 devices.
“We continue to move quickly to investigate the reported case to determine the cause and will share findings as soon as possible,” Samsung said.
“If we conclude a product safety issue exists, we will work with the CPSC (US Consumer Product Safety Commission) to take immediate steps to address the situation.”
Samsung is in talks with the Consumer Product Safety Commission (CPSC) after a lawsuit against the South Korean company over “exploding” washing machines.
The CPSC warned of problems with some of Samsung’s top-load machines.
It comes as a US law firm filed a suit against the tech giant, saying the fault can lead to injury or damage.
Models sold outside North America are not affected by this issue, a spokesperson said.
The problems follow Samsung’s global recall of its Note 7 smartphone over “exploding” batteries.
Both Samsung and the CPSC said that certain top-loading washing machines from March 2011 to April 2016 were affected.
In a statement, the company said: “In rare cases, affected units may experience abnormal vibrations that could pose a risk of personal injury or property damage when washing bedding, bulky or water-resistant items.”
Samsung advises consumers with affected models to use the lower-speed delicate cycle when washing those materials.
The company does not name the models, but allows customers to enter the serial number to see whether their machine is among those affected.
Samsung also faces a suit from a US law firm which alleges that some of its “top-loading washing machines explode in owners’ homes,” leading to potential injury or damage, according to attorney Jason Lichtman.
“Users have reported Samsung top-load washers exploding as early as the day of installation, while other owners have seen their machines explode months or even more than a year after purchase,” the firm said in a statement.
The faulty washing machines come right as Samsung is in the midst of a global recall of its flagship smartphone Galaxy Note 7.
Samsung was forced to urge 2.5 million phones to be returned because of faulty batteries causing some phones to catch fire and users reporting “exploding devices”.
The tech giant said on September 29 it would start selling new Galaxy Note 7 smartphones in South Korea this week.
The revamped smartphone will start being sold in other markets, including some European countries, on October 28.
A Samsung spokeswoman said: “We would like to reassure everyone that new Note 7 phones are operating properly and pose no safety concerns.”
Samsung Galaxy Note 7 users traveling by plane have been warned by the Federal Aviation Administration (FAA) not to switch on or charge their phones when on board the plane.
The FAA also advised against packing the phones into any checked-in luggage.
Last week, Samsung recalled the Galaxy Note 7 smartphone after reports emerged of the device exploding during or after charging.
Qantas and Virgin Australia have also told customers not to charge or use the smartphone during flights.
Samsung has said that battery problems were behind the phones catching fire, but that it was difficult to work out which phones were affected among those sold.
The FAA said: “In light of recent incidents and concerns raised by Samsung about its Galaxy Note 7 devices, the Federal Aviation Administration strongly advises passengers not to turn on or charge these devices on board aircraft and not to stow them in any checked baggage.”
Following Galaxy Note 7 recall, Qantas said on September 8 it was “requesting that passengers who own [the devices] do not switch on or charge them in-flight.”
The Galaxy Note 7 was launched last month and has been otherwise generally well-received by consumers and critics.
Some 2.5 million phones have been shipped globally.
Samsung has said customers who have already bought the phone will be able to swap it for a new one and that it would take about two weeks to prepare replacement devices.
The US trade group Airlines for America said it was “closely monitoring” the Galaxy Note 7 issue and that carriers in the US would make their own ruling over the use of the phone on board.
An Airlines for America spokesperson said in a statement:“Each individual carrier makes determinations, in compliance with FAA safety rules and regulations, as to what is permitted to be carried on board and in the cargo hold.”
South Korea-listed shares of Samsung Electronics were down close to 3% in early Friday trade.
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