Samsung’s Galaxy Note7 recall will cost the company $3.9 billion over the next six months
RELEASING a potentially explosive phone is set to cost Samsung big time, with the tech giant revealing its recalls will come with a multibillion-dollar bill.
Technology
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SAMSUNG’S unprecedented worldwide phone recall will come at an unprecedented cost, as the leading smartphone maker revealed it will take a multibillion-dollar hit to its profits over the next six months alone.
The South Korean tech giant today issued a statement announcing the “direct cost” of abandoning its potentially dangerous Galaxy Note7 phone would reach $3.9 billion over the next two quarters, with revenue down more than $2.3 billion over the next three months.
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The news comes just days after Samsung announced its second recall of the smartphone, an announcement that saw the company’s stock price fall more than $22 billion in one day.
Samsung also revealed it would not quickly replace the Note7 phone with a different model, instead focusing on its flagship phones released in March.
“Moving forward, Samsung Electronics plans to normalise its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 Edge,” the company said.
“Additionally, the company will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.”
Samsung formally announced its second Australian recall for Galaxy Note7 smartphones on Wednesday, following reports of five fires in “safe” replacement phones.
More than 100 Galaxy Note7 smartphones have reportedly caught fire to date, including 23 overheating in the US after the initial recall.
Originally published as Samsung’s Galaxy Note7 recall will cost the company $3.9 billion over the next six months
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