Samsung Electronics, the world's top maker of memory chips and LCD screens, posted a 72 per cent drop in quarterly profit and said it was too early to call a recovery in demand or prices.
But a rebound in mobile phone margins helped Samsung, the world's second largest mobile maker after Nokia, beat market profit forecasts by some distance.
A battered global memory chip sector is showing some signs of emerging from a severe downturn as big production cuts have helped eased a supply glut, but Samsung remained cautious.
"We believe it is still premature to expect a global economy, as well as consumer demand, recovery in the near term," said Robert Yi, head of Samsung's investor relations.
He said a sharp recovery in the memory chip or LCD markets was unlikely, but Samsung aimed to outperform in semiconductors and mobiles.
Samsung shares fell 4.9 per cent by 0422 GMT in a flat market. Shares in South Korea's biggest company had risen 39 percent this year through Thursday, beating the KOSPI's 22 per cent rise, with expectations that earnings could top forecasts fuelling recent gains.
Samsung's semiconductor business posted a bigger-than-expected 17 per cent operating loss margin, following a 14 per cent loss margin in the fourth quarter.
The company forecast prices of its mainstay dynamic random access memory (DRAM) chips, mostly used to power personal computers, would rise in the low single digits this quarter, but added that oversupply would stifle big price rises.
Samsung's January-March net profit fell to 619 billion won ($458.1 million) from 2.19 trillion won a year ago, but was well above an average forecast for 149 billion won.
Operating profit was 148 billion won, well below last year's 2.15 trillion won, but trumping expectations for a 152 billion won loss.
Quarterly sales of 18.6 trillion won also beat expectations.
Samsung said its telecoms margins surged to 12 per cent from 2 per cent in the fourth quarter, and it hoped to continue outperforming a shrinking broader market, focusing on high-end phones and marketing.
Samsung's LCD division reported a loss margin of 8 per cent, unchanged from the previous quarter. Samsung said its LCD lines would run at full capacity this quarter, but cautioned prices may fall again if everyone ramps up output, triggering more oversupply.
Reuters