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Samsung Cuts Profit by $2.3 Billion After Killing Note 7

  • Company said Tuesday it would stop producing Note 7 phones
  • One shareholder says this is Samsung’s ‘biggest crisis’
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Samsung Trims Profit by $2.3 Billion on Troubled Note 7

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Samsung Electronics Co. cut its third-quarter operating profit by $2.3 billion after ending production of its fire-prone Galaxy Note 7 smartphones, the first official indication of how much the crisis will cost South Korea’s largest company.

Profit is projected to be 5.2 trillion won ($4.63 billion) instead of 7.8 trillion won in the three months ended September, the company said in a regulatory statement Wednesday. That effectively erases all the mobile business profit that analysts had been projecting. Revenue will be 47 trillion won instead of 49 trillion won.
 
Samsung and Vice Chairman Jay Y. Lee are struggling to contain fallout from the troubled Note 7 phones, which were overheating and catching fire even after a recall that was supposed to fix the problem. The Suwon-based company said Tuesday it would kill this generation of the high-end phone and then cut third-quarter guidance today, less than a week after it was first issued.