Samsung’s Galaxy Note 7 recall could cost the company $1 billion

Samsung’s Galaxy Note 7 recall, which was issued due to certain battery issues, is going to cost the company a large chunk of change. Just how large is the subject of some speculation but there are folks out there willing to attach numbers to a cost that Samsung will only call a “heartbreaking amount”.

Samsung has resolved to replace all 2.5 million handsets sold in the two weeks before the Note 7 recall took place. This is after around 35 devices were found to have faulty batteries, which ignited while the handset was being charged. The cost for this mass replacement is an estimated $1 billion, according to Bloomberg, which spoke to analysts from Credit Suisse Group AG, Daishin Securities Co. and Pelham Smithers Associates.

Samsung isn’t commenting on the cost at all but even the $1 billion replacement amount will still only account for around for 5% of the company’s projected net income for the year. It could still work out cheaper than a Dr. Evil-pleasing amount but the South Korean company looks to be biting the bullet, no matter the cost. Samsung is said to be more concerned with its status as the current Android front-runner than with the money that the recall is costing them.

The problem for the company now is that they’ve lost their head-start on Apple’s iPhone 7, due to be revealed tonight. If not for the recall Samsung’s newest handset would have had a substantial lead on the iPhone. Delays from the recall mean that Samsung and Apple’s sales are going to run head-to-head this year. That should be an interesting race to watch.

Source: Bloomberg