Samsung Electronics expects rapidly recovering demand for its premium computer memory chips and flat screen TVs to drive growth this year, with the unwinding of global stimulus measures the key risk for sales.
The world's top maker of memory chips and LCD screens said the rising won currency could also dent earnings, although most analysts were bullish about the outlook for a company that has become a global brand in the space of 10 years.
Beijing's move to tighten monetary conditions has raised concerns about a potential slowdown in the giant economy, hurting the demand outlook for countries such as South Korea, which ships about a quarter of its exports to China.
Those worries and weak results from U.S. tech firms put pressure on Samsung shares on Friday, which ended down 3 percent, or 5 percent on the week.
Talk of exit strategies can weigh on Samsung as well as the entire market in the coming months, said Choi Jong-hyeok, a fund manager at Midas Asset Management.
But I am confident about Samsung's business this year. Chips and LCDs are doing great, and Samsung is working on its smartphones although it was a little late to start.
Ahead of the results, analysts expected net profit at Asia's biggest technology firm by market capitalization to grow by a third to 13 trillion won ($11 billion) this year, according to Thomson Reuters I/B/E/S.
A revival in corporate demand for personal computers and robust TV panel demand spurred by Chinese buyers and major sports events such as the World Cup should lead to a strong first half, bucking the usual weak seasonality, Samsung said.
The company said it was considering increasing its investment in memory chips to meet demand.
Samsung, the world's biggest TV brand and No. 2 mobile phone maker, swung to a quarterly operating profit, slightly ahead of market forecasts, as the tech sector recovery boosted chip prices and shoppers snapped up TVs and mobile phones.
Its bigger rival in mobile phones, Nokia, reported forecast-beating earnings on Thursday, while Motorola turned a small quarterly profit but predicted a loss in the current quarter.
Consolidated operating profit in the fourth quarter rose to 3.7 trillion won, above a consensus forecast for 3.58 trillion won profit from Thomson Reuters I/B/E/S and exactly in line with the company's own forecast earlier this month.
Fourth quarter sales rose 19 percent to 39.24 trillion won.
It was the first time Samsung reports earnings since the new chief executive Choi Gee-sung took over in a management reshuffle in December, promising Samsung would also beef up its PC, appliance and camera businesses.
Samsung made a remarkable recovery last year from the global downturn, expanding its share to more than one-fifth of the global market for LCD TVs and mobile phones from the mid-teens two years ago.
But tough competition in smartphones poses a challenge, while Japanese TV rivals such as Sony Corp and Panasonic Corp are beefing up their line-ups to claw back market share.
Jeffrey Lee, who helps manage $2.5 billion as chief investment officer at Phillip Capital in Singapore, said he recently sold shares in Samsung on concerns about prospects for the firm's mobile phone business.
Intuitively, with the iPhone making such a big impact globally, this is going to have an impact on the smartphone business. The ones that have been losing their edge seem to be Samsung and Nokia, Lee said.
At the same time Apple Inc's new iPad tablet computer offers a new growth opportunity for Samsung's NAND flash chips.
Semiconductors will drive Samsung's earnings this year ... Consumer fever for Apple's iPhone and new tablet product is likely to help Samsung's chip business, said Won Sang-Phil, market analyst at Tong Yang Securities in Seoul.
Analysts played down the threat of the stronger won, which has risen 35 percent off its low last March. They said it would have to climb above 1,000 won to the dollar from 1,158 currently to really hit sales.
Samsung expects to achieve a double-digit profit margin in the mobile phone unit in 2010, at least matching the 10 percent margin it had last year.
It expected the global mobile phone market to grow 10 percent in 2010 and Samsung to outperform, by offering more touchscreen models and new smartphones, such as one using Google's Android operating system.
Samsung shares finished down 3 percent at 784,000 won, compared with a 2.44 percent fall in the Seoul market, hit by a weak finish for U.S. tech stocks after Motorola's disappointing forecast.
Hynix Semiconductor Inc, No. 2 in memory chips, last week reported a higher-than-expected quarterly profit and forecast a further recovery in the sector.
Shares in Samsung shot up 77 percent last year, well ahead of the broader market's 50 percent gain, but underperformed in the fourth quarter on concerns about the strengthening Korean won hurting exports.
(Additional reporting by Miyoung Kim, Shin Ji-eun and Kim Yeon-hee in SEOUL and Kevin Lim in SINGAPORE)
(Writing by Sonali Paul; Editing by Dean Yates)