Samsung powers ahead to another record profit in Q3

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Samsung Electronics said it climbed to another record operating profit in the third quarter of 2012, peaking at around $7.3 billion, a testament to the continued success of the company's smartphone business.

Samsung's expected operating profit beat analysts' estimates, according to Bloomberg. In the second quarter Samsung posted an operating profit of $6.04 billion, which was a record.

The South Korean electronics conglomerate said company-wide sales likely totaled $46.7 billion, which would handily beat the year-ago period $42.8 billion and the $41.8 billion the company had in the second quarter of 2012. Samsung did not break out its expected profit or sales by unit.

Samsung's results likely received a jolt because of wider availability of its flagship Galaxy S III Android smartphone, which went on sale in the United States this summer through five carriers. Samsung, the world's largest handset and smartphone maker by volume, is expanding distribution by year-end. Strong sales of the S III have likely driven up the average selling price of Samsung's overall handset line.

However, according to the Wall Street Journal, analysts think the operating profit from the company's mobile business may have peaked. Samsung will likely have to spend more money on marketing in the fourth quarter to counter Apple's (NASDAQ:AAPL) iPhone 5 in the market, as well as smartphones from Nokia (NYSE:NOK) and HTC running Microsoft's (NASDAQ:MSFT) Windows Phone 8 software.

Samsung may also be weighed down by the cost of a $1.05 billion damage award Apple won in August in a patent infringement trial against Samsung. Samsung has appealed the ruling. "Fourth-quarter profit will be pressured by one-off expenses: performance payouts and some $1 billion in legal provisioning relating to the Apple litigation," Lee Sun-tae, analyst at NH Investment & Securities, told Reuters. "Excluding those, core earnings will remain solid and a swing factor is how much Samsung spends on marketing."

Some analysts were optimistic about Samsung's prospects going forward. "Samsung is extremely resilient, they know what they need to work on, especially getting stronger on the services side to improve the stickiness of its devices and drive future sell-through," Infonetics research analyst Julien Blin told FierceWireless. "You should expect improvements in these areas in the coming quarters. The recent verdict definitely gave them some extra motivation to sustain its leadership in the smartphone market and keep executing well."

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

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