Seoul, Oct 27 (IANS): South Korean tech giant Samsung Electronics' net profits in the third quarter dropped by a massive 16.8 per cent, primarily due to the Galaxy Note 7 discontinuation, the company announced on Thursday as the shareholders approved the nomination of Vice Chairman Lee Jae-yong to the electronics giant's board of directors.

According to Yonhap news agency, top market cap Samsung Electronics rose 0.38 percent to end at 1,573,000 won after the nomination news, signalling that the only son of the ailing Chairman Lee Kun-hee will more actively participate and take formal responsibility in the company's important decision-making.

Earlier in the day, the company announced that operating profit dropped 29.7 per cent from a year earlier to 5.2 trillion won ($4.6 billion) in the July-September quarter. From three months ago, the profit tumbled 36.2 per cent.

It marked the lowest in two years, meeting the revised estimate by Samsung which slashed its preliminary forecast by 2.6 trillion won to reflect costs from the discontinuation of its fire-prone smartphone.

"We know we must work hard to earn back your trust and we are committed to doing just that," co-chief executive JK Shin was quoted as saying in media reports after the results were announced.

Scores of reports about Note 7 phones heating up and catching fire led Samsung to terminate its latest flagship model. Hundreds of owners of the device here have sued Samsung for inconvenience they experienced in the recall and termination process.

The company's revenue declined 7.5 per cent over the year to 47.82 trillion won in the September quarter, the lowest since the first quarter of last year. From the previous quarter, the revenue was down 6.1 per cent.

Net income dropped to 4.54 trillion won in the third quarter from 5.46 trillion won a year earlier. From three months ago, the net income plunged 22.4 per cent.

However, the Consumer Electronics Division achieved solid earnings growth driven by strong sales of SUHD TVs and premium home appliances.

The company estimated that the stronger Korean won against major currencies in the third quarter negatively impacted operating profit by approximately 700 billion won, mostly on the components business side.

"Looking ahead to the fourth quarter, the company expects earnings to improve year-on-year driven by strong performance in the components business. The mobile business expects a recovery in its earnings to a similar level with that of the fourth quarter of 2015, led by solid sales of the Galaxy S7 and S7 edge," Samsung said in a statement.

Looking to 2017, the company will focus on achieving earnings growth through normalisation of the mobile business while improving earnings for the components businesses.

"Regarding the mobile business, the company will focus on expanding sales of new flagship products with differentiated design and innovative features, as well as regaining consumers' confidence," the company said.

Samsung saw significant growth in the semiconductor business. The semiconductor business posted 13.15 won trillion in consolidated revenue and 3.37 trillion won in operating profit for the quarter.

"In particular, demand for memory chips saw a remarkable increase, due mainly to high-density, high-performance mobile and server products, including V-NAND based SSD," the company noted.

As for 2017, the company anticipates a turnaround with the launch of new flagship smartphones.