Note 7 recall to cost Samsung around $3 billion

Samsung’s recall of the Galaxy Note 7 will cost the company $3 billion over the next two fiscal quarters, the company has said in a statement. Since the device’s launch in August, it has been plagued with problems of overheating and exploding, forcing Samsung to recall millions of devices and issue customers with replacement Note 7’s. However, alarming reports of the replacement devices’ batteries exploding or catching fire has left the mobile giant with no option other than to completely recall the Note 7. Worryingly for Samsung, the company has not been yet able to pinpoint the reason behind such malfunctions.

Samsung’s woes were compounded further as the Note 7 was banned on all US flights to prevent risking the safety of other passengers. There have been nearly 100 reports of the device exploding and injuring owners and the US Department of Transport has decided to ban the phone from all US flights, in a recent announcement.

“The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision announced on October 11th, but expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters,” reads Samsung’s statement. “The negative impact is estimated in the mid-2 trillion won range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017.” At current conversation rates, 3.5 trillion won translates to around $3.1 billion.