Samsung has canceled the Galaxy Note7 and is now dealing with the fallout. Part of that is to revise the recently announced earnings guidance for Q3. The original guidance was looking forward to KRW 7.8 trillion operating profit ($7 billion, up 6% YoY) on sales of KRW 49 trillion ($43.9 billion).
The revised numbers show KRW 47 trillion ($41.8 billion) in sales and KRW 5.2 trillion ($4.6 billion) in operating profit. Last year, the company made KRW 7.4 trillion and was on track to beat that and analysts expectations, but those plans went up in smoke. This represents the first drop in profit for the Korean giant in a year.
Samsung stock has taken a hit, while shares in chief rival Apple rose slightly. As much as $18 billion was wiped off Samsung’s market cap. Perhaps worse is the loss of consumer trust, that’s something to lookout for in Q4.
On the plus side, Samsung’s component business (like memory chips and displays) is promising to keep growing and offset losses from the mobile division.