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Early Thursday morning, Samsung posted its dismal financial results for the third-quarter ended September 30, 2016, revealing that its company’s quarterly operating profit had tumbled more than 30% in the wake of the botched recall and eventual discontinuation of the Galaxy Note 7.
Samsung’s co-chief executive J.K. Shin publicly apologized for the fiasco at a shareholders’ meeting in Seoul following the earnings release. So far, Samsung has recalled around 2.5 million of the exploding smartphones and provided 1.47 million replacement sets to affected customers. They still haven’t figured out what went wrong, and it may be some time before they fully understand the cause of the defect.
Unsurprisingly, the Korean mobile giant’s IT and Mobile Division experienced the biggest losses, with nearly all of its earnings going up in flames as a result of the Note 7 failure. Its operating profit dropped by more than 95% to 100 billion won ($88 million), a staggering loss in light of the 2.4 trillion won ($2.1 billion) it earned a year earlier. It was the worst drop the mobile division experienced in the six years since the first Galaxy smartphone debuted.
Overall, Samsung posted an operating profit of 5.2 trillion won ($4.5 billion). By comparison, it earned 7.39 trillion won ($6.4 billion) a year ago.
The Note 7’s discontinuation also hit Samsung’s display business, leading to declining shipments of its flexible OLED panel for phones, though overall, the division’s earnings actually increased thanks to healthy demand for its other OLED and LCD TV panels. Samsung’s semiconductor business, which makes V-NAND memory chips for mobile phones, also saw remarkable growth, helping to offset some of the mobile division’s losses. As such, the company announced it would continue investing in OLED and V-NAND, given the reliable demand for them.
As for its tarnished mobile business, Samsung said that it would focus on bringing new flagships with “differentiated design and innovative features” to market and also work on “regaining consumers’ confidence.”[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_progress_bar][/vc_column][/vc_row]