The financial burden of Samsung Electronics Co.'s Note 7 crisisis becoming clearer, as South Korea’s largest company tallies thecost of recalling and terminating production of the fire-prone smartphone.

The Suwon-based company disclosed on Friday a negative impact ofapproximately mid-3 trillion won ($3 billion) on operating profitthrough March 2017, on top of an already announced $2.3 billion cutfor the preceding period.

The total of $5.3 billion is in line with analysts’ estimates.Chung Chang-Won at Nomura Holdings Inc., had estimated that theNote 7 termination would cost the company about $5 billion inoperating profit through 2017. Investors appear to have factored inan impact of that magnitude, and Samsung shares rose 1.3 percent to1.577 million won at the close in Seoul.

“Samsung just has to bear it,” said Yoo Jong-Woo, ananalyst at Korea Investment & Securities Co. The top priorityis to “rebuild trust,” he said.

With the dent in revenue, operating profit will be lower bymid-2 trillion won in the fourth quarter and about 1 trillion wonin the first three months of 2017, Samsung said. In additionto the announcements, the company had already reportedlower-than-projected profit from the mobile division in the priorquarter, partly reflecting the impact of the first few weeks of theNote 7 recall. With that factored in, the “costs for the Note 7crisis totals about 7 trillion won, and that means Samsung has lostabout one quarter of income,” Yoo said.

Samsung shares have slumped more than 8 percent this week,wiping about $20 billion from its market value. That has alsoattracted investors who are betting that the company is moving fastenough to deal with the debacle and that it offers long-termvalue.

Making up for lost revenue

The company said it plans to make up for lost revenue byexpanding sales of flagship models such as the Galaxy S7 and GalaxyS7 Edge. Samsung has been struggling with the fallout from thetroubled Note 7 phones, which were overheating and catching fire even after arecall that was supposed to fix the problem. Samsung said Tuesdayit would kill this generation of the high-end phone.

Samsung and Vice Chairman Jay Y. Lee are struggling to containfallout from the troubled Note 7 phones. The debacle is testingSamsung’s management and raising questions about whether it needsstronger leadership. Lee Kun-hee, the family patriarch, remainschairman even though he suffered a heart attack more than two yearsago and hasn’t been back at the company since. Jay Y., his son, isheir apparent but he hasn’t been able to take his father’s titlebecause of Korean custom.

“Samsung will now try its best to do better in other divisionsincluding semiconductors and it will also try hard to promote salesof S7s because there are no alternative Galaxy devices until thefirst quarter of next year,” said Park Kang-Ho at DaishinSecurities Co. “The shares will remain pegged around the currentlevels but may start rising if more restructuring comes out, or thenext Galaxy S models succeed.”

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