Strong sales of Galaxy phones propelled Samsung's quarterly profit to a record high, but its shares dropped Friday on the prospect its growth will slow in an increasingly crowded smartphone market.
Samsung Electronics Co. said July-September net profit nearly doubled to 6.56 trillion won ($5.97 billion) from 3.44 trillion won a year earlier. Revenue for the third quarter climbed 26 percent to 52.2 trillion won.
The company's shares fell as much as 2 percent in Seoul after the earnings announcement. Analysts said investors are worried that the widespread adoption of smartphones in developed markets and heightened competition from rivals could squeeze profit from the lucrative smartphone business. Samsung and Apple Inc. together account for nearly half of global smartphone sales.
The South Korean company, which raked in more than half of its profit and revenue from its mobile communications business, said its Galaxy S III and Galaxy Note II smartphones will help sustain its earnings momentum in the final quarter of the year.
Samsung also plans to act more aggressively to advance its share of the tablet PC market next year, its vice presidents Kim Hyun-joon and Robert Yi said at a conference call with investors.
Samsung is logging record profits
“The tablet market is going through a very significant change,” Yi, Samsung's head of investor relations, said at a conference call. The release of mini tablets that are between the size of smartphones and standard tablets could open up a new growth area next year, he said.
Apple, a leader in the tablet market, announced a smaller and cheaper iPad earlier this week, pitting its 7.9-inch iPad mini against small tablets from Amazon, Google and Samsung. Samsung launched the Galaxy Note II, an overblown smartphone with a 5.5-inch screen and a digital pen, in the U.S. market earlier this week.
Operating profit surged 91 percent to an all-time high of 8.12 trillion won ($7.4 billion) in the third quarter, in line with the company's preliminary results released earlier this month. Samsung is the world's largest maker of computer memory chips, mobile phones and TVs.
In the latest quarter, Samsung benefited from robust sales of its Galaxy smartphones as well as demand for high-end components for mobile devices, which offset weak global PC demand and a thin profit from its memory chip business.
Its mobile communications division that sells the Galaxy series of smartphones and tablet computers generated revenue of 26.3 trillion won.
Sales of the Galaxy S III smartphone topped 20 million handsets in little more than three months after its May 29 launch. Samsung said the Galaxy Note II, the latest iteration of the Note series, is expected to exceed the 10 million sales of its predecessor.
Research firm IDC said Samsung further widened its gap with runner-up Apple in the smartphone market. IDC said Samsung sold 56.3 million smartphones versus Apple's 26.9 million iPhone sales, capturing 31.3 percent of the global smartphone market in the third quarter.
High-end display panels called OLED, or organic light-emitting diode, which are used in mobile devices including Samsung's own smartphones, also shored up its bottom line, Samsung said.
With the latest result, Samsung set a record-high quarterly operating profit for a fourth quarter in a row. But some analysts are skeptical whether Samsung will post another increase in profit in the final quarter of this year due to higher marketing costs.
Samsung said it will try to increase profit even it faces heightened competition during the holiday season. In addition to its Android-powered Galaxy series, Samsung plans to release ATIV smartphones based on Windows 8, the latest version of Microsoft's Windows operating system, before the end of this year.
Publish date: October 26, 2012 10:30 am| Modified date: December 19, 2013 3:26 am
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