Samsung profits plunge after Note 7 smartphone debacle

Samsung profits plunge after Note 7 smartphone debacle
South Korean electronics giant Samsung has reported a drop in third-quarter profit of 30 percent, following the disastrous recall of its flagship Galaxy Note 7 smartphone.

The company’s overall operating profit fell to $4.6 billion which is the lowest level in two years. Its mobile division’s operating profit collapsed 98 percent to just $88 million.

Samsung said this month it will lose approximately $3.1 billion on the Note 7 recall over the next six months.

The company has scrapped the entire line less than two months after its launch due to safety considerations. That followed a global recall of at least 2.5 million phones due to faulty batteries that could ignite. The manufacturer assured customers fixed devices were safe but the problems with overheating and fires continued.

After weeks of unsuccessful attempts to save the brand's image, the electronics firm announced it was ending the production and sale of the Note 7’s.

The troubled smartphones have been banned by major airlines worldwide.

“Regarding the mobile business, the company will focus on expanding sales of new flagship products with differentiated design and innovative features, as well as regaining consumers’ confidence,” Samsung said on Thursday.

READ MORE: Samsung losses to exceed $5bn over Note 7 failure

The company’s new flagship smartphone, the Galaxy Note 8 is expected to be released in February.

"Samsung has lost consumer confidence, but I think it still has at least one more chance. Rather than rushing to release the next product, it should conduct a thorough inspection and explain the results of its investigation into the Note 7," Greg Roh an analyst at HMC Investment Securities told the BBC.