Samsung Electronics' <005930.KS> stronger-than-expected quarterly earnings forecast on Tuesday failed to impress investors, who are worried a fast recovering won and competition are starting to cut into profits.

Analysts were looking ahead to the South Korean company's fourth-quarter results, which could signal a slowdown linked to increased spending and heightened competition from the likes of Japan's Sony <6758.T> and home rival LG Electronics <066570.KS>.

Samsung, the world's top maker of memory chips and flat screen TVs, made a spectacular turnaround this year, riding a sector recovery and wrestling market share from global rivals, sending its stock to a record high last month.

But analysts said the best might be over.

Samsung seems to have reached a peak, said Shinhan Investment analyst Sung Hye-jin. Earnings will likely fall in the fourth quarter as LCD prices have turned lower, the handset division will spend more on marketing as usual, and its rivals have quickly caught up in the LED TV sector.

The results forecast from Samsung is the first from a major consumer electronics maker for the quarter and could point to an improvement in consumer confidence.

Samsung shares ended with a small loss, wiping out early gains. They have fallen 10 percent from a record struck on September 22 versus a 7 percent fall in the broader market <.KS11>.

Of a total of 42 analysts surveyed by Thomson Reuters I/B/E/S, 24 had a buy rating and another 15 had strong buy.

The stock is still up 65 percent so far this year, beating a 42 percent jump in the broader market and outperforming LG's 52 percent gain and Sony's 27 percent rise.

Numbers were great but shares are weighed by growing concerns over the fourth quarter, said Choi Jong-hyeok, a fund manager at Midas Asset Management.

Analysts are lowering expectations for fourth-quarter earnings due to the recent recovery in the won.

On Tuesday, Samsung forecast third-quarter consolidated earnings to come at median 4.1 trillion won ($3.5 billion), higher than market estimates and up more than 60 percent from the second quarter. If earnings come in as indicated, Samsung could post one of its strongest quarters in July-September.

The recovery is likely to be most evident in its flagship memory chip business, which is expected to post a parent-basis operating profit margin of about 16 percent, up from 3 percent in the second quarter and an abysmal 17 percent loss margin in the hard-hit first quarter.

Robust sales of flat screen TVs have been another key driver for Samsung, the world's biggest maker of liquid crystal display (LCD) panels and TV sets.

Shortage of raw materials kept LCD prices high while Samsung established itself as a leader in the premium LCD TV segment which uses light emitting diode (LED).

It is expected to have fared better than rivals in mobile phones, where Samsung competes with Finland's Nokia and LG.

Samsung releases third quarter results on October 30.

Beyond the fourth quarter, traditionally a weak period for the technology sector, the South Korean powerhouse is set to post strong earnings well into 2010, analysts said.

Earnings will slightly weaken in the fourth quarter, but it's likely that the momentum will continue in the next few quarters, said Jay Kim, an analyst at Hyundai Securities.

The outlook depends on the foreign exchange rate and how aggressively Samsung spends on marketing for mobile phones and TVs.

In the past two months, analysts have raised average estimates on Samsung's 2009 consolidated operating profit by 8 percent to 9.8 trillion won, according to Thomson Reuters I/B/E/S.

Samsung's operating profit median was higher than a consensus forecast of 3.8 trillion won from 10 analysts polled by Thomson Reuters I/B/E/S.

($1=1165.2 Won)

(Additional reporting by Seo Eun-kyung; Editing by Anshuman Daga)