SEOUL, South Korea -- Samsung Electronics missed already modest expectations for its quarterly earnings guidance Friday, deepening worries that its smartphone business may have peaked, as growth in sales of its blockbuster Galaxy phones begins to wane and new rivals emerge to eat away at its market share.
The Galaxy S, powered by Google's (GOOG) free Android platform, propelled the South Korean firm into the top rank of smartphone makers in 2012, overtaking Apple (AAPL), whose iPhone had set an industry standard five years earlier.
Now investors fear Samsung may also follow in the footsteps of Apple and other once-mighty players that are struggling with shrinking margins, in an industry where companies live and die by their ability to stay ahead of the innovation curve.
"Is Samsung's smartphone story now over? Not quite yet. Its growth is indeed slowing due largely to disappointing sales of the S4," said Jung Sang-Jin, a fund manager at Dongbu Asset Management.
The disappointing earnings estimate by Samsung, which has had a track record of beating even the most bullish forecasts, sent its shares down more than 3 percent Friday.
They have dropped 17 percent since early June.
The fall in share price equates to a drop in market value of 39 trillion won ($34.2 billion), or worth the combined market capitalisation of Sony and LG Electronics..