JEDDAH/SEOUL – Samsung Electronics Co., the world's biggest maker of TVs and mobile phones, reported record profit in the three months ended Sept. 30, with net profit surging 91 percent to 6.56 trillion won ($6 billion), the Suwon, South Korea-based company said in a statement Friday. Operating profit from telecommunications more than doubled as Samsung's Galaxy devices widened their lead over Apple Inc.'s iPhone. Samsung shares dropped amid concern growth in smartphone demand may have peaked after Apple reported earnings that missed estimates and Microsoft Corp. released its Surface tablet, escalating competition for mobile devices. “The problem is the worry about the smartphone market peaking,” said Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co. “The question is whether tablets can offset the peak in the smartphone market, but it might take some time. Apple's results refueled these concerns.” Samsung fell 2.7 percent, the most in two weeks, to 1,287,000 won at the close of Seoul trading, paring gains this year to 22 percent. South Korea's benchmark Kospi index declined 1.7 percent. Competition probably will increase in the fourth quarter amid a global economic slowdown, Samsung said in a statement today. The company will focus on high-value products to maintain its momentum and will try to boost sales of tablet computers with more pen-equipped models and cheaper devices, Samsung said. “We plan to make tablets our new growth engine,” the company said in the statement. Apple's share of the global tablet market fell to 57 percent in the third quarter from 65 percent a year earlier, losing sales to devices running Google Inc.'s Android software, according to Strategy Analytics. Samsung's operating profit surged 91 percent to 8.12 trillion won from 4.25 trillion won the year before. Sales rose to 52.18 trillion won, equivalent to 19 percent of South Korea's gross domestic product, from 41.27 trillion won a year earlier. More than two-thirds of the earnings were generated by the telecommunications business, where operating profit jumped to 5.63 trillion won from 2.42 trillion won, the company. “The mobile phone number came out very strong,” Kim Young Chan, a Seoul-based analyst at Shinhan Investment Corp., said. “It again confirms that there's no real competitor out there other than Apple. The Samsung-Apple duopoly will likely continue for a while.” Samsung shipped 56.9 million smartphones in the third quarter, giving it a record 35 percent market share, compared with 17 percent for Apple, Strategy Analytics said today. In overall handset sales, including basic types, Samsung remained the top seller, researcher IDC said separately. Sales of the Galaxy S III surpassed 20 million units in the 100 days after its May debut, Samsung said Sept. 6. The company also is offering the Galaxy Note II phone, equipped with a pen and a larger screen than the S III, after the first version sold more than 10 million units. Samsung's earnings from phone sales will probably decrease in the fourth quarter, compared with the previous three-month period, as the company increases spending on marketing to maintain its sales lead, Kim said. Apple, lagging behind only Samsung in the $219 billion global smartphone market, started selling the iPhone 5 with a bigger screen, lightweight body design and faster processor than previous models last month. On Oct. 23, the company unveiled a smaller, cheaper version of the iPad. Cupertino, California-based Apple reported debut weekend sales of more than 5 million units for the iPhone 5, falling short of some analyst estimates after supply constraints delayed shipments. Apple forecast profit yesterday that fell short of analyst predictions because of rising costs to revamp product lines. LG Electronics Inc. and other rivals using Android are flooding the market with high-performance devices and pushing down prices, Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., said Friday. “Chances are smartphone profit will go down from here,” Im said. “It's getting harder to differentiate with hardware, and average prices are falling.” – Agencies
