Samsung to roll out Galaxy Note 7 replacements this week

►Uncertainty looms over Samsung Electronics’ 2016 profit as tech giant struggles to handle global recall and regain sales momentum

Korea’s three telecom companies said Sunday that Galaxy Note 7 owners can exchange their devices for new ones by visiting the stores where they purchased the smartphones, from Monday until the end of the month.

From October, Samsung Electronics service centers will handle the replacement,  according to SK Telecom, KT and LG Uplus.

Customers can also choose to exchange their affected devices with a new Galaxy S7 or Galaxy S7 Edge, or receive a full refund.

In the US, Samsung, in cooperation with the US Consumer Product Safety Commission, also announced a voluntary recall and exchange program for all Galaxy Note 7 devices sold in the country before last Thursday.

The new replacement devices will become available in the US no later than Sept. 21, Samsung Electronics’ US unit said in a statement last Thursday.

“Since the affected devices can overheat and pose a safety risk, if you own a Galaxy Note7, it is extremely important to stop using your device, power it down and immediately exchange it using our US Note 7 Exchange Program,” the company said.

Samsung had already begun its recall process in Singapore as of last Friday, offering customers an apology letter, a $30 cash voucher, a screen protection film and a bag of snacks. Around half of its Singaporean customers have exchanged their phones on the first day, the Korean tech firm said.

The current recall deals a costly blow to Samsung, which had been betting on the Galaxy Note 7 to bolster its sales against competitors such as Apple and its recently released iPhone 7 and iPhone Plus.

Given Samsung Electronics’ tarnished brand image and the financial costs of the recall, local analysts remain uncertain over whether the company’s operating profit this year can surpass the 30 trillion won ($26.7 billion) mark as hoped.

In light of the Note 7 debacle, most local analysts lowered their forecasts for Samsung Electronics’ third-quarter operating profit last week. However, their projections for the company’s annual operating profit continued to hover at around 30 trillion won.

As of Sept. 12, local financial information provider FnGuide had set the market consensus of Samsung Electronics’ 2016 operating profit at 30.55 trillion won, which is similar to its forecast of 30.58 trillion won made on Aug. 11 before the Note 7’s official launch.

The same day, HI Investment & Securities analyst Song Myung-sup lowered his forecast for Samsung Electronics’ annual operating profit to 31.36 trillion, reflecting a decline in expectations for the firm’s third-quarter operating profit from 8.8 trillion won to 7.9 trillion won.

At the same time, Song raised the possibility that the replaced Note 7 devices could cause additional problems. Samsung Electronics would suffer a long-term decline in sales and its brand image, further taking down its yearly profit, he said.

KB Investment & Securities analyst Kim Sang-pyo also echoed such concerns.

“Even as Samsung Electronics resumes its sales of the Galaxy Note 7, the firm’s smartphone business could suffer a severe crisis in the case that additional defects are found,” Kim wrote in a report released on Sept. 13.

“Given this, Galaxy Note 7 sales for the latter half of this year are likely to significantly decline compared to the same period last year,” he said, suggesting a grim outlook for Samsung’s premium smartphone business.

By Sohn Ji-young/The Korea Herald (jys@heraldcorp.com)