Jan. 15 (Bloomberg) -- Samsung Electronics Co., Asia's largest semiconductor and flat-screen maker, posted a smaller drop in fourth-quarter profit than analysts estimated as liquid-crystal display earnings countered a decline in chip prices.

Net income fell 6.6 percent to 2.21 trillion won ($2.4 billion), from 2.37 trillion won a year earlier, the Suwon, South Korea-based company said in a statement today. Profit exceeded the 1.95 trillion won median estimate of 22 analysts surveyed by Bloomberg. Sales rose 11 percent to 17.48 trillion won.

Samsung's profit from LCDs tripled to a record, easing concern over the memory-chip glut that eroded earnings last quarter. Asia's largest electronics maker by market value joined LG.Philips LCD Co. in reporting results that beat estimates, helping boost shares of flat-panel makers in the region.

``Samsung is coming back with a vengeance,'' said Kim Jun Yon, head of equities at Yurie Asset Management Inc. in Seoul, which manages about $10 billion in assets. ``LCDs will continue to lead earnings in the first quarter.''

Samsung rose 1.3 percent to 532,000 won at the end of trading on the Korea Exchange, the stock's first two-day gain since Dec. 24. The benchmark Kospi index fell 1.1 percent.

International Business Machines Corp., the world's biggest computer-services company, climbed the most in more than five years in New York yesterday after earnings beat analyst estimates.

Capital Spending

Samsung's revenue, including that of overseas subsidiaries, will probably increase at least 15 percent this year and capital spending will be about 11 trillion won, the company said.

Profit from LCDs, which generated about a third of total operating income last year, jumped to 920 billion won during the quarter, exceeding the 833 billion won median estimate in the Bloomberg survey. Sales increased 40 percent. LG.Philips, the second-largest LCD maker, reported record profit yesterday.

Samsung, the world's largest maker of flat-screens used in computers and televisions, today forecast the shortage of displays will persist this year on demand for larger TV screens, keeping prices ``stable.'' This year's Beijing Olympics will probably help global LCD TV sales rise 30 percent to 98 million sets in 2008, Samsung said.

``We are not satisfying demand from customers,'' Cho Yeong Duk, vice president of Samsung's LCD division, said during a conference call with analysts and investors.

Profit from semiconductors fell about 74 percent to 430 billion won, missing the 445 billion won median estimate in the Bloomberg survey. Samsung is the world's second-largest chipmaker after Intel Corp.

Chips Fall

Prices of benchmark computer-memory chips, which speed up programs by temporarily storing frequently used data, tumbled 85 percent last year, according to Dramexchange Technology Inc., Asia's biggest spot market for semiconductors.

Samsung forecast prices of chips known as dynamic random access memory, or DRAM, and NAND flash memory used in consumer electronics will fall by a ``double-digit'' percentage in the first quarter from the previous three months because of a glut.

``This year's earnings will depend on the memory business,'' Chu Woo Sik, head of investor relations at Samsung, told reporters today. ``First-quarter memory profit will decline from the previous quarter but we expect the industry to recover in the second half.''

Prices may rebound in the second quarter as chipmakers scale back on investment plans this year and cut production because of oversupply, according to analysts at Lehman Brothers Holdings Inc. and UBS AG.

Intel, based in Santa Clara, California, is due to report fourth-quarter earnings today.

Mobile Phones

Samsung's earnings from telecommunications, including mobile phones, climbed about 67 percent to 580 billion won, beating the 484 billion won median estimate in the Bloomberg survey.

Revenue at the division gained 15 percent to 5.37 trillion won after shipments rose 41 percent from a year earlier to a record 46.3 million phones. Average prices fell 0.2 percent from the previous three months as the company sold more low-end phones, Samsung said.

Samsung, which last year overtook Motorola Inc. as the second-largest mobile-phone maker, maintained its November forecast of selling more than 200 million handsets this year, citing demand from emerging markets and high-end phones.

First-quarter shipments from mobile phones will increase from the fourth quarter, while the business will generate profit margins of at least 10 percent this year, Samsung said.

Samsung today said it plans to pay 7,500 won per common share in dividends to shareholders as of the end of last year, up 50 percent from the annual payout in 2006.

Headquarters Raided

Separately, South Korean prosecutors today raided Samsung Group's headquarters in downtown Seoul amid a probe over allegations the country's largest industrial group created slush funds to bribe government officials, politicians, prosecutors and journalists.

``They raided the strategic planning office at our headquarters,'' Yim Jun Seok, a Samsung Group spokesman, said today by telephone in Seoul, declining to provide further details.

Samsung's Chu said the company was having difficulty in finalizing this year's business plans, including setting a schedule for the annual shareholder meeting, because of the ongoing investigation. It plans to set a detailed business plan for 2008 as soon as possible, Chu said.

To contact the reporter on this story: Kevin Cho in Seoul at kcho2@bloomberg.net

Last Updated: January 15, 2008 04:30 EST