Samsung Electronics, the world's top maker of memory chips and flat screens, is set to report improved profits in 2011, after it estimated fourth-quarter profit would be the lowest in six quarters.
Booming sales of smartphones and a recovery in the memory chips business are likely to boost results this year.
After a weak start, Samsung is challenging Apple with its Galaxy S high-end smartphone, powered by Google's Android software and its Galaxy Tab is being seen by some analysts as the strongest rival to Apple's iPad tablet so far.
Samsung has successfully expanded into the smartphone and tablet PC segments. Samsung is a totally different story compared to pure chip and display plays. Its diversified portfolio creates stable profits in the cyclical businesses, said Ahn Young-hoe, a fund manager at KTB Asset Managment.
Samsung's new business such as biotechnology and new displays also brighten the prospect, he said.
Samsung, the first major global technology firm to flag preliminary December quarter results, has held on to its No.1 slot in TVS against Sony and Panasonic and is performing strongly over U.S. chip rival Micron Technology.
Samsung shares have jumped 25 percent since November and struck a record high on Monday on expectations of a recovery in profits. Out of 46 analysts tracking Samsung, only two have a hold rating, while the others have a buy or strong buy, showcasing the market's bullish expectations on the company.
Tablets are in focus during the U.S. Consumer Electronics Show that kicked off on Thursday in Las Vegas, with Research In Motion, LG Electronics, Motorola and other players introducing their new tablet devices.
Sony, considered a laggard in some areas of high-end consumer electronics, surprised some analysts by not unveiling a tablet rival to Apple's iPad. It still said it aims emerge as the world's second largest maker of tablet devices behind Apple by 2012.
EARNINGS AT BOTTOM?
Samsung, which has a tradition of beating even the most bullish estimates, expects its operating profit to come in at 3.0 trillion won ($2.67 billion) for October-December. It provided a range of 2.8 trillion won to 3.2 trillion won, lower than a consensus forecast of 3.4 trillion won polled by Thomson Reuters I/B/E/S.
That would be down from 4.9 trillion won for the preceding quarter and versus 3.4 trillion won a year ago.
I think its chip business has hit the bottom in the fourth quarter, and will start recovering in the first quarter, said Lee Jeong, analyst at Hana Daetoo Securities.
The biggest risk in the short term for Samsung is the seasonal factor, as IT demand usually slows during this period. Much will depend on how well Samsung overcomes this off season.
Samsung's shares have far outpaced a 10 percent gain in the broader market since November and versus a rise of about 5 percent in the FTSE global technology sector index.
(Additional reporting by Seoul bureau; Editing by Anshuman Daga)