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Samsung forecasts record Q4 profits in spite of Note 7 debacle

Although Samsung said that the Note 7 termination would put a dent in its profits for two quarters, it doesn't look like that will be the case. The South Korean manufacturer has released its earnings guidance for Q4 2016 (opens in new tab), in which it estimated that operating profit was likely $7.8 billion (9.2 trillion won), up 50% from the same period in 2015. However, overall revenue for the quarter decreased by 0.6% from Q4 2015 to $45 billion (53 trillion won).

A large part of the uptick in profits is due to Samsung's chip business, which managed to offset the losses from the mobile unit. According to Reuters, the chip division is expected to post profits of over $3.3 billion (4 trillion won).

With no second flagship to catalyze sales, Samsung fell back on aggressively marketing the Galaxy S7 and S7 edge, launching new color options and variants with higher internal storage. The Note line in general doesn't have the mainstream appeal as the Galaxy S series, and Samsung's forecast highlights that fact.

Samsung will release its final earnings results in the last week of January.

Harish Jonnalagadda
Harish Jonnalagadda

Harish Jonnalagadda is a Senior Editor overseeing Asia at Android Central. He leads the site's coverage of Chinese phone brands, contributing to reviews, features, and buying guides. He also writes about storage servers, audio products, and the semiconductor industry. Contact him on Twitter at @chunkynerd.

  • Hasn't the Note always been a bit of a niche phone?
    I'd imagine that its sales are fairly negligible compared to the S7/S7E.
  • I believe that was once the case. Considering how many were sold world wide, and how many are still out in the wild I'm guessing the niche label can be removed. I'm more inclined to believe there's been some creative book keeping.
  • Creative bookkeeping? Ok
  • Wasn't implying that there's some shady bookkeeping , other posters better stated what I was trying to imply. Specifically, other revenue streams. Poor choice of words... it happens
  • It clearly says in the article the offset of the mobile division was because of the chip division. Nothing creative about that.
  • You struggle at grasping the big picture don't you?
  • Clearly. Did you not grasp that?
  • I think they were trying to move it as a larger alternative to the 7. I kjnow I was hoping to get a Note 7 after a few months, and i've never been a Note user.
  • Yes, the Note line-up is niche. Just like any phablet line.
    Of course, some people will point out that the Note 7 sold more than the LG V20. But that's a false comparison. If not only because the V20 isn't available worldwide (we didn't get it in Europe), you can only evaluate the success of a line of phones WITHIN that same OEM portfolio.
    The Note line, within the Samsung portfolio, is a very niche line. And let us not forget that the Note 7 was nothing more than an S7 Edge with a pen. So moving customers to the S7E wasn't difficult. And then you have the fact that the iPhone 7 is a flop in sales for Apple (I wonder if it's because of its courageousness...). Samsung got incredibly lucky.
    At least finacially.
  • Shows how much of a Niche the Note really is.
  • Or it shows how it benefits to have other sectors of the markets and not just rely on phone sales.
  • Yes. Gargantuan company making a huge variety of products.
  • Exactly
  • Ding, ding, ding! Yah, what percentage of revenue does the iPhone account for again? Apple better pray a new iPhone never has a Note 7 level recall. Though I don't see Cupertino being nearly as conciliatory (free TVs, phone bill credits, etc). Apple likes its piles of cash.
  • Yep
  • Yes, Apple would say your burning it wrong. And I own an iPhone 6s.
  • Niche for Samsung, but larger than most other mobile companies.
  • Well, they don't only sell phones. They also sell dishwashers, microwaves, washers and dryers, televisions and the list goes on. This isn't strictly phone sales.
  • Exploding washers at that.
  • Only on top loading ones, which are inherently a poorer design than front loaders. Consider it Darwinism at work in the laundry sector.
  • Piggy , ironically.....Just like the note 7, not one washer exploded.
  • But that's because they also manufacture tanks* for the South Korean army so there's a bit of technological overlap ;) (*Yes. Samsung also has a military division.)
  • No they don't, Samsung sold their stake in the military division a few years ago.
  • Yup. I bought a (non-exploding) washer dryer form them this year, which is a lot more than a Note 7 would have been. Plus a Galaxy J3 when I shattered the screen on my S7 Edge.
  • Diversified revenue streams are a beautiful thing.
  • Never put your eggs in one basket. It's the reason why LG can take a fall with the LG5 and refresh with 6 because of other division. Sony as well. They can continue to take some hit as long as the whole umbrella is succeeding.
  • does samsung plan to offer deep rebates to everyone that traded in their note 7 and switched to gs7 out of loyalty so we can move up to the gs8 when it arrives .. or to a note 8 if it will ever exist?
  • Nah, don't count on it :) One can dream, though.
  • In Korea, they will. Worldwide, not likely.
  • Why should they do that? You could return your note or swap it for another phone. I'm not sure why they should owe you anything more than that.
  • Vinvino - exactly what I came on here to ask as well. I think that after enduring not just one but two recalls - and the subsequent inconvenience caused for everyone who had a Note 7 - it would be a wonderful gesture from Samsung to make while they bathe in the glow and enjoy the feelgood factor of their continued profits. Dare I say that those of us who stayed with their brand in spite of the Note 7 debacle contributed in some way to said profits. 😉 Going to be interesting to find out.
  • Make bad products and profit !!!
  • Wait...I thought you said before that they were going down?
  • You are such a samsung hater with your moto phone made with samsung components. What an oxymoron!
  • Lmao, you are so right. Pretty much every Samsung article. He's the Bizarro world version of Phillip Pugh. Now, let's see how long it takes my very own, personal troll to show up. A mentally ill piece of trash, stalking me all over the Internet.
  • I had one.
  • Actually, he has a Pixel and a Mate 9.
  • I'm not sure if it's him, but I remember someone writing their dissatisfaction on how Samsung barely updates their US unlocked models of the S7.
  • It's not him. This guy barely speaks beyond one sentence Samsung hate speak. He's the bot I can count on in every Samsung article.
  • You sure? He seems familiar.
  • If he does, it must be from Google threads. In Samsung threads, this is all he does.
  • Thing is that they generally make excellent products. Which is why there are more Samsung phones sold than any other vendor. They are big enough to have a major recall and survive it. Imagine if HTC went through the same thing! You think that they would have the resources to put everything right?
  • Much of Samsungs huge profits come from them supplying almost all of the high cost parts to almost every phone maker. The screen ram storage and soc. I said it half a year back on this site that samsung would have high profits because of the shortage of those parts increasing prices while the site was reporting doom for samsung
  • And guess which company will manufacture the latest and greatest snapdragon that most flagships will sport in 2017? ;)
  • HTC better start looking into diversification (beyond niche products like vr).
  • They don't have the resources or money for that matter to able to.
  • Ugh, the editorial image chosen just makes me cry. That phone was so pretty. I need stable N on my S7E to assuage my longing for my Note 7 back until its replacement can come to market. Oh and yeah Samsung on making money (though as I've said: diversifying your revenue streams is a good thing).
  • Still miss mine. But I will admit, I am liking this Moto Z a lot more than I previously thought. It's surprisingly good.
  • Just goes to show you that the media typing explosion into every article title for clicks didnt deter the overall buying public. Everyone has some dings in there product portfolio especially when you productions hundreds of million of items.
  • I'm sorry but I'm finding this a little difficult to believe!   But figures never liar's figure!
  • Also having a hard time believing this. A 4 billion dollar ( on the chin seems like it would hurt anyone. Not sure how the mobile division compares with the appliances but I know after recently trying to purchase 4 new Samsung appliances I was informed of their financial woes and told Samsung has changed their pay model from 90-days within the purchase (for re sellers) to payment on order. Now the retailers told me to come in and pick all new appliances because Samsung keeps canceling their order because they can't afford to make anymore to fulfill demand.
  • Good to news . Now hopefully my note 8 will arrive on time
  • Enron is that you........mark to market huh ^_^
  • I can't help but be amused. Even though they have 2 recalls that began this year while their home nation is being gripped by an ongoing corruption scandal and economic troubles along with accusations of their involvement in said scandal, the electronic division seems to still be able to make good money. Sounds like you can have good things even when everything is going against you
  • I beg to differ. Edge 7 can't be compared to the Note7. I had the edge temporarily while waiting on Note7 replacement. Hated it. No comparison. Screen too curved. Actually ran hot. Lagged. Dust magnet. My Note7 was a great device. Have had all the Notes. It is a niche. Damn good one
  • Edge phones can run warm. The Note 7 ran FIRE. No comparison.
  • A must watch