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Samsung blames Note 7 woes as profit forecast slashed by $2.3bn

Samsung Electronics (KSE: 005930.KS - news) has cut, by $2.3bn (£1.9bn), its third quarter profits forecast, in a revision to figures issued only days ago amid its smartphone crisis.

The company made the announcement in a surprise regulatory filing after financial markets closed in South Korea.

It has endured a torrid week after it was forced to scrap its disaster-stricken Galaxy Note 7 smartphone following evidence replacement handset batteries were also prone to overheating and exploding.

The company cited the financial impact of pulling the phone - its flagship device - from the market for its decision to cut its third quarter operating profit guidance to $4.66bn from $7bn.

It added that revenues for the July-September period had also been adjusted. The company had only issued its initial guidance for the quarter last Friday.

That filing had forecast a 6% increase in operating profits compared to the same period in 2015 - boosted by strong trading in its component businesses.

:: Smartphone war fuels Samsung woes

A drag from its smartphone division was already expected, but the update to its guidance reflects the serious turn of events in the fallout from the Note (Stockholm: NOTE.ST - news) 7 recall - with costs rising and its brand image taking a hit.

Samsung's share price has taken a pounding since news of the battery defect broke, with more than $18bn (£14.6bn) wiped off its market value.

The firm also announced on Wednesday it had been forced to fork out for fire-resistant packages to send to its customers in the US so they can safely return devices to retailers.

The shipping boxes, the company explained, were a legal requirement for shipping lithium-ion batteries or products containing them.