Samsung Electronics, the world's top maker of memory chips and televisions, estimated April-June operating profit would fall 26 percent, as its LCD display business is widely expected to report another loss.
The South Korean company's earnings recovery is likely to be slow in the second half of this year because of a bleak outlook for computers and TVs and a wobbly global economy, analysts said.
Robust sales of a new version of Samsung's flagship Galaxy S smartphone, which competes with Apple's iPhone, might however make up for weakness in flat screens and TVs, they said.
Samsung is the first major global technology firm to kick off quarterly earnings and is expected to emerge as the world's top smartphone vendor in the second quarter, overtaking Nokia's more than 10-year reign.
(The forecast) is slightly better than what the market had been expecting as many had been slashing their forecasts recently due to losses from the LCD division, said Kim Young-chan, an analyst at Shinhan Investment Corp.
It will be again smartphones which will lead earnings recovery in the second half of this year, although competition may get toughen again in the third quarter when Apple introduces a new iPhone. But the division is on a firm growth track and the biggest concern for Samsung remains its flat screen operation.
Samsung estimated its quarterly operating profit at 3.7 trillion won ($3.5 billion), compared with a consensus forecast of 3.9 trillion won by analysts surveyed by Thomson Reuters I/B/E/S. That would be down 26 percent from a record 5.01 trillion won a year ago and up 25 percent from the preceding quarter.
The company's operating profit was expected to show a downside surprise of 6 percent to 3.6 trillion won, according to Thomson Reuters SmartEstimates, which places more weight on recent forecasts by top-rated analysts.
Samsung will provide detailed quarterly results later this month.
Shares in Samsung, Asia's most valuable technology company with a market value of around $134 billion, have fallen around 5 percent over the past three months in a wider market down 1 percent.
The company's handset business, which saw its profit halved just a year ago due to a lack of compelling products to compete against the iPhone, staged a strong comeback to become its major profit center.
(Reporting by Miyoung Kim; Editing by Anshuman Daga and Jonathan Hopfner)