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Big smartphone sales can't lift overall Samsung profits

The telecom unit saw record profits, but Samsung's other units didn't, and overall profits dropped 23%. The company promises a big Q4.

Samsung's Galaxy S II flagship phone helped propel the telecommunication unit's record profits.
Josh Miller

Samsung Electronics reported a 23 percent decline in its third-quarter profit despite surging performance from its mobile devices unit.

The South Korean consumer electronics titan reported a profit of 3.44 trillion Korean won ($3.08 billion) on revenue of KRW41.27 trillion ($37.43 billion).

Samsung posted declining profits in its memory business, where demand for PC RAM continued to be weak, as well as operating losses at its display panel business.

Like fellow Korean conglomerate LG Electronics, the company cited weak global demand for the results, but said it expects a pickup heading into the holiday selling season in the fourth quarter.

Unlike LG, however, Samsung's handset business continues to do gangbusters. The company is relying more heavily on the unit to generate a significant portion of its profit and revenue, driven by the success of the Galaxy S II smartphone line-up. The company recently overtook Apple for the global smartphone market share crown, according to Strategy Analytics.

The telecommunications unit posted a 39 percent increase in revenue as smartphone shipments rose 300 percent over a year ago, when the company was still establishing its Galaxy brand. The company said it has shipped more than 10 million units in five months since its introduction.

Samsung said its tablet sales volume increased with the expansion of the 8.9 and 10.1-inch versions of the Galaxy Tab tablet computing device.

The company is fighting Apple's attempt to get its Galaxy tablets and phones banned in several countries.

For the fourth quarter, the company expects the launch of new premium devices, including the Galaxy Nexus, as well as a 5.3-inch Galaxy Note, to drive sales of its mobile devices. The company also expects strong demand in the developed countries to support tablet growth for the period.