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Phones

Samsung braces for Galaxy Note 7 financial fallout

The company expects to pull in less money as people seek refunds for their now defunct phones.

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The Galaxy Note 7 is no more.

CNET/Sarah Tew

Samsung is preparing to take a financial hit following the Galaxy Note 7 debacle.

The company on Wednesday slashed its estimated operating profit by a third, predicting that it would make $2.3 billion less in the three months between July and September than it originally forecast.

The company published a new third-quarter estimate of $4.6 billion a day after it said it would be permanently discontinuing the Galaxy Note 7.

The Note 7 incident represents a massive embarrassment for the South Korean conglomerate. The well-received phone was supposed to challenge the iPhone 7 for supremacy, but suffered two different waves of cases in which the Note 7 would overheat and catch fire. After already offering replacements once, the company had no choice but to kill off the phone.

"After recent incidents and in consideration of our consumers' safety, Samsung Electronics stopped sales, exchanges and production of the Galaxy Note 7," said the company in a press release. The new forecast "reflects the impact of this decision," it added.

In its previous forecast, issued last week, Samsung had already accounted for the fact that it would have to replace early models of the phone it had been forced to recall. The updated figures also take into account that many customers will now be seeking full refunds for their phones.

Not included in the forecast is the potential damage to Samsung's brand and reputation.