Samsung Elec Q3 net down but op surprises

SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS) posted a 44 percent drop in third-quarter net profit as the global slowdown hurt its businesses, but operating profit beat estimates as semiconductors showed some resilience.

Still, the future looks challenging for the world's top maker of memory chips and liquid crystal displays (LCDs), which is facing a lengthy downturn in the once-reliable memory market and a rapid margin deterioration in the flat-screen sector, along with slowing demand for all consumer electronics.

"The market environment in the third quarter proved challenging amid rising costs and a downturn in the global economy," Chu Woo-sik, Samsung's senior executive in charge of investor relations, said in a statement.

"We foresee the coming months to be an even more challenging period."

Shares in Samsung, South Korea's biggest company worth about $48 billion, fell 4.23 percent to 452,500 won at 0104 GMT, in line with the wider market's .KS11 4 percent drop. The stock had fallen 13.8 percent in the third quarter, also in line with the KOSPI's 13.5 percent loss.

Samsung's July-September net profit fell to 1.22 trillion won ($870.5 million) from 2.19 trillion won a year ago and 2.14 trillion won earned in April-June.

The figure came right in line with a forecast for a 1.23 trillion won net profit by 11 analysts polled by Reuters.

Operating profit for the third quarter fell to 1.02 trillion won, widely beating expectations for 823.5 billion won. The figure still represented a steep drop from 2.07 trillion won a year ago and the second-quarter profit of 1.89 trillion won.

Revenue rose to 19.26 trillion won from 16.68 trillion won a year ago and 18.14 trillion the previous quarter.

Operating margins at Samsung's semiconductor unit fell to 5 percent compared to 6 percent in the second quarter and 18 percent a year ago as the price of most computer memory chips has fallen below cash costs. But the figure was better than analysts' prediction for a low single digit or break-even profit margin.

Makers of memory chips, mired in a downturn that started in early 2007, are not expecting a recovery before the second quarter of 2009.

Samsung's display division margins fell to 8 percent from the second quarter's 21 percent amid a rapid deterioration of the market due to oversupply.

Samsung, second only to Nokia (NOK1V.HE) in the handset market, sold 51.8 million mobile phones, up sharply from 45.7 million in April-June.

Mobile margins dropped to a smaller-than-expected 7 percent from 13 percent in the second quarter.

(Additional reporting by Miyoung Kim and Park Ju-min)

(Editing by Jonathan Hopfner)