Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Samsung's 2.6 trillion won ($2.3 billion) cut in operating profit for last quarter is welcome news.

Less than a week ago, I argued that the preliminary operating figures the South Korean company released on Oct. 7 clearly didn't factor in the impact of the Note 7 fiasco, and Samsung should hurry up to write off as much of its contingent liabilities as possible.

In slashing its outlook for third-quarter operating income from 7.8 trillion won to 5.2 trillion won, executives have signaled their willingness to quickly recognize the massive scale and scope of the costs. Revenue will now be 47 trillion won instead of 49 trillion won.

Big Bath
A 2.6 trillion won cut means Samsung will post its lowest operating profit in two years
Source: Bloomberg

It's ironic that Samsung's accountants seem to be able to figure out the financial cost of the Note 7 drama faster than its engineers can work out what caused it.

Markets hate uncertainty, and the last thing investors want is for a company to appear like it's spinning out of control by not being able to account for its failures. This haircut, announced late Wednesday after South Korean markets closed, won't be the end of that accounting, but it's an important start.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

(An earlier version of this column was corrected to amend figure in first paragraph.)

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net