Electronics giant Samsung has slashed its quarterly sales estimate by 2.3 billion dollars after a safety fault forced it to halt the sale and production of it's flagship Note 7 smartphone. Kate King looks at what that could mean for South Korea.
Samsung's decision to permanently switch off sales of its flagship Note 7 smartphone quickly written into its quarterly profit estimate. The tech giant slashing it by a third . It now expects its July-September operating profit to be 4.7 billion dollars, down 2.3 billion. (SOUNDBITE) (ENGLISH) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "Earlier in the year they were really seen as an equal to Apple really in the space and now people are likely to be wary of Samsung phones it's going to take a long time but they have got the firepower to ride this out and they have got other business lines that can at least help to cushion the impact." Product exchanges and refunds for Note 7 phones in South Korea are about to start. It's likely to be the first indication of the damage done to Samsung's reputation. (SOUNDBITE) (English) RESEARCH DIRECTOR AT COUNTERPOINT TECHNOLOGY MARKET RESEARCH, TOM KANG, SAYING: "They originally wanted a large device with a pen function so there is no substitute in the market at this point so they will probably go for a refund and that will cost Samsung." The electronics giant has already seen its shares fall 10 percent - and they could tumble further with the profit announcement coming AFTER Seoul's market closed. Samsung is the largest business conglomerate in South Korea- accounting for some 20 percent of the country's GDP. (SOUNDBITE) (ENGLISH) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "The knock-on effects from Samsung's stumble here are quite manifold, it will interesting to see how it really does play out in South Korean economic data over the next few months and whether there really is a big enough hit to, not just GDP, but things like consumer spending as well." It's failure to identify WHAT went wrong, and to assure consumers its other models WON'T be affected is key. Either way this could end up being one of the costliest product safety failures in tech history.