Samsung Net Profit 2016 Sudden Decline, Should Galaxy Note 7 be Blamed?

Earlier this week, Apple announced their dropping iPhone sales. It turns out, Samsung is experiencing the same fate. Samsung Electronics Co. confirms that their net profit dropped by 16.8%, while their overall operating profit declines by 30%.

The disastrous recall of Galaxy Note 7 has backfired giving Samsung the lowest quarterly profit ever since they launched their Galaxy series six years ago.

Last September, Samsung issued what could have been the world largest smartphone recall in history after several reports of their smartphones causing a fire. Sadly, the company was pushed to do another recall after the replacement phone that was supposedly "safer" than the recalled unit also combusted.

If there is good news, however, then that's the fact that Samsung's component business that produces memory chips and display panels continuous to please. In fact, they help offset the decline in their mobile business. They further added that the operating profits for their semiconductor business amount to 3.37 trillion won, which no doubt is pushed by the strong demand for their memory chips. On the other hand, their display panel business offers operating profits of 1.02 trillion won, which is due to the increased demand for their OLED panels. Along with this, there is also a boost in the sales of their large-sized LCD TV panels.

And it is likely that Samsung isn't losing hope as it will counteract the mess by "expanding sales of new flagship products... as well as regaining consumers' confidence." They added that they expect to improve their performance in October-December quarter.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said that the demise of Note 7 could not affect the expected boost in sales for Samsung's holiday season "I think what people forget is just how small of a percent [the Note 7 sales] is and that's why we are not going to see the big hit in the fourth quarter"