Samsung's Preliminary Quarterly Profit Guidance shows false Profit by not accounting for Note7 Recall Costs
A new report this morning states that "Tech giant Samsung Electronics said it expects third-quarter operating profit grew 5.6 percent, beating estimates, as a pickup in chip and display earnings likely offset the impact of the Galaxy Note 7 smartphone recall." However the report clearly follows-up by stating that "The firm made no comment in the filing on how much the Galaxy Note 7 recall might cost," making today's profit guidance a false statement for the sake of coming the market down.
Another false means of raising Samsung's stock price this week involved stock activist investor Elliott Management calling for for a radical corporate makeover that exciting the market. But it's nothing that Samsung ever said that they would seriously consider. Because it helped to raise the stock, Samsung played it up as something they management would consider: Give me a break.
The Note 7 crisis is still unfolding with a Southwest Airlines Flight being evacuated this week due to a replacement Samsung Note 7 catching on fire. USA Today thinks that the Note7 situation is so bad, due the airline incident, that it should consider killing the Note 7 altogether to save the company's reputation. So the cost associated with the recall could be substantial and enough to wipe out any gains that the company is pretending to have.
Further, a report from the Korea Herald today stated that "The number of Note phones sold during the period is estimated at about 3 million units, which compared to the previous target figure of 6 million units." So at the very least sales were half of what they were expected and the cost of the recall isn't known. So this narrative that there's no problem with Samsung's profits due to Note 7 woes is absolutely false.
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