Samsung Mobile Profits All But Wiped Out On The Back Of Note 7 Troubles


Samsung reported a sharp fall in profits in the quarter to the end of September, with overall profits down by $1.8bn - a fall of around 25% and the smartphone division's profitability reduced to $87m - a fall of 96% on the same period last year. Given the costs of the Note 7 recalls, as well as the lost sales on approximately 12m devices, the performance was actually better than the stock market was expecting and as a result the company's stock recovered some of its recent falls.

Whilst the figures were less than impressive, it remains to be seen whether they represent the bottom for Samsung or are just a step on the way down. If depression in sales in the key fourth quarter are also affected Samsung may yet have stormy weather to navigate.

In a bizarre twist, Samsung retained more of its profits compared to 2015 than Apple did. In the third quarter the latter saw a fall in profit of $2.1bn, although Apple's fall amounted to less than a 20% reduction in profitability.

Both Apple and Samsung set expectations for a recovery in the fourth quarter, however I suspect that only one of these pieces of guidance will be accurate.

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