Samsung Profits Plummet Amid Galaxy Note 7 Crisis
12th October 2016
The South Korean tech firm Samsung Electronics has been forced to slash their quarterly profit forecast due to major problems with their latest Smartphone.
Samsung Electronics has reported that they now expect their third quarter profits to fall to £3.8 billion, a third lower than their original estimate.
Last month the Note 7 was recalled following complaints of battery fires, however the customers who were given replacements were still experiencing the same problem. As a result Samsung has now been forced to scrap the device.
On Tuesday, the global tech giant reported an 8% fall in profits, and on Wednesday shares in Samsung fell 0.8% ahead of the profit warning.
Resultantly, the company has seen more than $20 billion completely wiped of their market value in the space of just two days.
Investors are rightfully concerned that the current crisis may go further than just a momentary problem and affect the overall reputation of the company for years to come.
In September, Samsung were forced to recall over 2.5 million devices following complaints of batteries exploding. Despite this, the company later insisted the all devices that were replaced were completely safe. However, this was shortly followed by owners of replaced phones reported that their phones were catching fire.
On Tuesday the company finally said that they were permanently ceasing the production of the device and has urged all owners to turn off their devices and take them back to the shops where they purchased them.
With rivals such as Google and Apple recently announcing brand new high-end smart phones, Samsung could be in real trouble, In fact, the Note 7 had been seen as the main rival to Apples latest smart phone, the iPhone 7, but the current crisis at Samsung has sent Apple’s shares soaring to a 10 month high.
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