Take Note, 7 trillion Korean won blow to Samsung

By Alex Jensen

SEOUL (AA) – Samsung Electronics conceded Friday that its decision this week to abandon the flawed Galaxy Note 7 smartphone will continue to drag on the company's operating profit well into next year.

Amid speculation that rival handset makers will erode the Korean giant's market share, Samsung has been tending to its own financial wounds.

A company statement admitted that the "lost opportunity cost is estimated in the mid-2 trillion-won [$1.77-billion] range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017."

Factoring in Samsung's third-quarter hit as a result of halting production of the Note 7 due to a series of battery fires and explosions, the "entire financial impact" could reach around 7 trillion won ($6.2 billion) according to market watchers cited by local news agency Yonhap.

Now in damage limitation mode, the company said it plans to push its other flagship handsets while offering incentives to consumers who exchange their recalled Note 7 for an alternative Samsung model.

The statement also promised a close focus on "enhancing product safety”.

With its operating profit for July-September estimated at 7.8 trillion won earlier this month before taking Note 7 losses into account, Samsung appears to be able to swallow the blow for now -- but a special meeting of shareholders on Oct. 27 will offer a further insight into the company's direction, especially as 48-year-old Vice Chairman Lee Jae-yong moves to strengthen his position as heir to the family business.