Samsung Electronics Co. made it official to discontinue the controversial Galaxy Note7 with propensity to overheating and explosion and estimated losses from the pullout of its latest flagship smartphone to extend to the first quarter of next year in the scale of 3.5 trillion won ($3 billion) on top of 2.94 trillion won reflected in the third quarter.

In a disclosure statement ahead of the market opening in Seoul on Friday, the world’s top smartphone maker said it expected drop in revenue from discontinued sales of Galaxy Note7 released in August would have negative impact on operating profit up until the end of March before it can restore its reputation with an upgrade to another flagship Galaxy S series.

The direct cost from halt to global production and sales as well as refunding for replacement and original Galaxy Note7 phones has led the company to revise down the third-quarter guidance to 5.2 trillion won on Tuesday from 7.8 trillion won announced a few days earlier. The income has been slashed by nearly 3 trillion won from 8.14 trillion won in the second quarter.

The negative impact is estimated “in the mid-2 trillion won range” for the fourth quarter and “at approximately 1 trillion won” for the first quarter of 2017, it warned to investors.

The company instead plans to concentrate on expanding sales of flagship models such as Galaxy S7 and Galaxy S7 Edge released in the first half.

It promised to “focus on enhancing product safety for consumers by making significant changes in quality assurance processes.”

Samsung Electronics has been reeling from its worst-ever public product crisis after its newest smartphone invention with cutting-edge waterproof and iris scanner technology reported cases of catching fire while charging. It stopped sales and began bold recall for entire 2.5 million units sold around the world - mostly Korea and the United States. But it received another face-losing setback after the replacement phones also caught fire that led regulators around the world to warn users to stop using Galaxy Note7.

Shares of Samsung Electronics started off Friday on stronger note. At 9:39 a.m., shares were up 6,000 won at 1,563,000 won.

By Lee Seung-hoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]