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Samsung to disclose cause of Galaxy Note 7 fires day before Q4 earnings

Seung-il Ryu | NurPhoto | Getty Images

Samsung Electronics said on Friday it will disclose what caused some of its Galaxy Note 7 handsets to catch fire in a press conference scheduled the day before fourth quarter earnings result that it flagged as likely upbeat earlier this month.

The company said its executives, as well as independent expert organizations who conducted their own investigations on the Note 7 incidents, will share their findings during a press conference on Jan. 23 in Seoul, South Korea, which will also be available globally via a live-stream.

Samsung's head of mobile business, Koh Dong-jin, will also be present at the press conference. Samsung will release its fourth quarter and full-year 2016 earnings on Jan. 24.

The Note 7 event will also discuss the new measures that Samsung has implemented since last year's incident, which led to one of the biggest tech failures in history, as it seeks to restore consumer confidence in its products ahead of the key Galaxy S8 product launch slated for later this year.

Samsung Electronics shares slipped on Friday morning trade, down 1.23 percent at 1,851,000 won.

The problems with the Galaxy Note 7 began just days after its launch in August, when reports emerged that handsets caught fire related to an overheated battery. In early September, Samsung issued a recall of 2.5 million handsets in 10 markets, according to Reuters. Shortly after the replacement devices began rolling out, fresh reports of those devices catching fire surfaced, which ultimately led the South Korean giant to permanently discontinue the line.

Reuters reported, citing a source, that Samsung's probe found the battery was the main cause of the Note 7 fires.

Instrumental, a manufacturing technology company, previously performed a teardown of the handset and also identified the battery as the cause of the fires, but Samsung did not comment on this.

Subsequently, Samsung had said it expected to book an operating loss of over $5 billion spread over the last two quarters of 2016 and the January-March 2017 quarter. It took a massive hit of 96 percent on-year decline in operating profit for the mobile business in the third quarter of 2016, although strong performances in its component business helped to cushion the blow.

For its October-December quarter guidance, Samsung said earlier this month it expected to see some recovery in the mobile division, while memory and display businesses were expected to lead an anticipated 50 percent on-year jump in total operating profits.

Analysts previously said further clarity into what caused the Note 7 handsets to catch fire could go a long way in restoring user confidence. To be sure, despite the bungled Note 7 issue, data from research firms showed Samsung's lead in the smartphone market, by shipment volume, remained well above second-placed Apple.

Samsung's Note 7 disclosures and subsequent earnings release could help to shift the focus away from the series of corporate governance issues the broader conglomerate is currently facing in South Korea.

The company's chief, Jay Y. Lee, was accused by a special prosecutor of paying bribes to organizations linked to a friend of President Park Geun-hye, who is at the center of a corruption scandal, in a bid to secure the 2015 merger of Samsung C&T and Cheil Industries, according to Reuters. Seoul's central district court on Thursday dismissed a warrant to arrest Lee.

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