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Samsung Q3 profits expected to soar despite all of those Note 7 explosions

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Korean tech behemoth Samsung Electronics is confident that it will be able to beat analyst estimates to deliver a positive third quarter result. Even after the defected Galaxy Note 7 battery woes blew up in the company’s face, the profit figures are likely to grow about 5.6 per cent, reports Reuters.

In a brief regulatory filing, Samsung reports that it expects an operating profit of 7.8 trillion won ($7 billion) as compared to the 7.4 trillion won reported in analyst forecasts. The rise could be attributed to the exceptional chip and display sales in their home country, which ultimately off-set the ‘heartbreaking’ cost of the global recall of Note 7s.

But the company doesn’t seem to have met the $51 trillion won estimate with regard to the revenue numbers. It expects the revenues in the third qurter, ended Sept’16, to be just a little over 49 trillion won($44 billion). It is also about a 4 per cent drop from the last quarter when the company reported revenues of 50.94 trillion won.

The operating profit is indeed exceptional when compared to the status of the company in the past couple months, but they’re still lower than the previous quarter. Samsung has piqued the interest of investors last quarter, Q2, when it reported sales, record profit and revenue figures. It posted 8.12 trillion won profit, its highest in two years, thanks to a revival of the mobile and component business.

The company had imagined to emulate the same success and boost profits with the launch of its latest flagship device, Galaxy Note 7, but the whole exploding debacle has only left its trust in shambles. Analysts believe that this whole Note 7 debacle is expected to cost the Korean giant a minimum of $1 trillion won(about $1 billion).

The trouble first came to light when numerous devices started overheating and blasting off while being plugged in for charging. The company acknowledged that there was a problem with their batteries and promised to replace all 2.5 million devices sold since launch. But, reports of replaced ‘safe’ smartphones exploding have also started surfacing the interwebs.

Commenting on the reported rise in earnings and its cause, IBK Asset Management analyst Kim Hyun-su said,

Obviously the Note 7 recall costs were reflected but business segments such as memory and OLED displays did well and will probably continue to do so until at least next year.

The unexpected rise in earning call stems from the strong performance of its semiconductor components, display and consumer electronics display. The company did not only sell a whopping number of 4K television sets, but the demand for a staggering number of chips for the replacement drive would have added up to the increase. But also because the tight market conditions surrounding chip production which have led to a spike in prices of DRAM and NAND flashes over the past couple of years.

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