With the Galaxy Note 7 going up in flames, the controversial smartphone took Samsung's chances of a good third quarter along with it.
Samsung expected the Galaxy Note 7 to continue the momentum that it gained with the release of its previous flagship smartphone, the Galaxy S7. However, that was simply not meant to be, as reported cases of exploding batteries and Galaxy Note 7 units catching fire eventually led to a failed worldwide recall program, a second recall of exploding replacement units and thus the end of the smartphone's short life.
The financial impact of the Galaxy Note 7 fiasco was on full display when Samsung reported its performance for the third quarter, with the company booking its worst operating profit over the past two years.
Samsung reported a third quarter operating profit of 5.2 trillion won, equivalent to about $4.5 billion, which is a decrease of 30 percent compared to the operating profit booked in the same quarter in 2015. The figure matches Samsung's earlier released revised operating profit estimate for the quarter, which was lowered from the previous expectation of 7.8 trillion won, or around $7 billion.
The effect of the discontinued Galaxy Note 7 is better seen in the mobile division of the company, which reported an operating profit of 100 billion won or about $87.8 million. This figure represents a massive 96 percent decline compared to the third quarter of last year, and is the worst operating profit for the division over a period of almost eight years.
The company would be in much deeper trouble if not for its relatively successful and stable businesses of display panels and semiconductors. The display panels division earned 1.02 trillion won, which is an increase of 9.7 percent, while the semiconductors division raked in 3.37 trillion won, though that is a decrease of 7.9 percent.
Samsung, however, promised that it will be aiming to quickly recover from the disaster that is the Galaxy Note 7, with the company expecting a better fourth quarter from the continuous strong performance of its components divisions.
Samsung, while still unsure what the reason was behind the explosions of the Galaxy Note 7's batteries, is already looking forward to moving on from the device to the next flagship smartphone, the Galaxy S8.
Samsung will be launching an upgrade program for previous Galaxy Note 7 owners that will allow them to trade in the devices that they acquired to replace the explosive smartphone into the Galaxy S8 or the Galaxy Note 8 at a discounted price. The program, however, has so far only been announced for the company's home country of South Korea.
