Samsung electronics seeks China turnaround, unveils mid-tier handsets with premium feel

The Galaxy A3 and A5 will be Samsung's first devices to feature fully metal bodies and its thinnest smartphones to date. In size, they are comparable to those of the top-of-the-line Galaxy S5, though of lesser screen resolution quality.

Samsung said on Friday that it will start selling the Galaxy A3 and A5 in China sometime in November. It classified them as mid-tier, and said they will be launched in other "select markets", without disclosing the pricing.

The announcement, combined with hopes for an earnings recovery and bigger dividends, pushed Samsung's shares to a two-month high in Seoul in midday trade on Friday.

The news comes a day after Samsung reported its worst quarterly operating profit in more than three years. Earnings from its handset division slumped 73.9 percent from a year earlier.

The company said its responses to "rapid shifts in the competitive landscape" were not quick enough. It vowed to revamp its offerings.

"For our mid to low-end smartphones we will enhance product competitiveness by differentiating our displays and materials as well as upgrading camera functionality," Senior Vice President Kim Hyun-joon told analysts on Thursday.

The world's smartphone leader is regrouping as it lost market share in annual terms for the third straight quarter in July-September, according to Strategy Analytics.

It has been beaten by Apple Inc's iPhones in the premium segment and undercut by Chinese rivals like Lenovo Group Ltd and Xiaomi Inc at the bottom end.

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Samsung seeks smartphone revamp to arrest profit slide

The global smartphone leader's market share declined in annual terms for the third straight quarter in July-September, lagging Apple Inc in the premium market and overtaken by rivals like Lenovo Group Ltd and Xiaomi Inc at the bottom end, research firm Strategy Analytics said.
             
Executives said the South Korean giant would overhaul its lower-tier line-up to boost price competitiveness and use higher-quality components to set its devices apart, after it announced its worst third-quarter profit in more than three years.
             
"The mid-to-low end market is growing rapidly, and we plan to respond actively in order to capitalise on that growth," Samsung Senior Vice President Kim Hyun-joon said during a conference call with analysts.
             
Samsung said its third-quarter operating profit fell by an annual 60.1 percent to 4.1 trillion won ($3.9 billion), matching its guidance issued earlier this month.
             
While the company expects profits to pick up in the fourth quarter on strong demand for televisions and memory chips, analysts still expect Samsung to record its worst annual operating profit in three years.
             
Profit for the mobile division fell 73.9 percent to 1.75 trillion won in the third quarter, its worst performance since the second quarter of 2011.
             
Samsung spent most of the quarter without launching a new flagship device, and continued to struggle in the mid-to-low tier markets against cheaper and value-packed offerings like Xiaomi's Redmi 1S.
             
Robert Yi, Samsung's head of investor relations, said the firm would launch new mid-tier models in the fourth quarter, although he didn't specify what features they would have.
             
Samsung expects average selling prices for handsets will rise in the fourth quarter due to an increase in premium smartphone sales, namely of the Galaxy Note 4, and as demand picks up in the holiday shopping season.
             
Analysts say Samsung will likely have to sacrifice margins to protect its market share. Cheaper phones are expected to drive global smartphone market growth in coming years, meaning a general trend of lower average selling prices.
             
Samsung's chips division was a bright spot, recording a 2.26 trillion operating profit for the July-September quarter to mark the highest earnings since the third quarter of 2010.

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