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Samsung Electronics expects near 50% annual jump in operating profits for Q1 2017

SeongJoon Cho | Bloomberg | Getty Images

Samsung Electronics said on Friday it expects a nearly 50 percent annual jump in first-quarter operating profit but did not breakout performance by business unit.

In a regulatory filing, Samsung said consolidated operating profit for the January-March quarter was likely 9.9 trillion Korean won ($8.76 billion), up some 48.2 percent from a year earlier, and beating a Reuters poll that predicted 9.4 trillion won.

Revenue for the quarter was expected to be approximately 50 trillion won, up 0.44 percent annually.

But the guidance failed to shore up investor confidence on Friday as Samsung shares declined 0.96 percent in early trade.

Recent earnings have shown Samsung's components business have become a driving force for the tech giant, thanks to growing demand for memory chips and OLED displays from other smartphone makers.

The semiconductor business — which sells memory chips to others including Apple — was the standout performer in Samsung's fourth-quarter 2016 earnings, where the unit's operating profit saw a near 77 percent annual jump and accounted for about 47 percent of Samsung's annual profit numbers.

Data from IHS Markit showed Samsung was the dominant market player in both DRAM and NAND flash memory businesses last quarter.

Walter Coon, NAND director at IHS, said with prices of flash memory rising in early 2017, and seasonal tailwinds in place for the second half of the year, the market is poised to set another record — which might boost Samsung's numbers later in the year.

The South Korean giant has been embroiled in a series of recent controversies beginning last year with a botched launch of the exploding Galaxy Note 7 handsets. Then, the conglomerate's de-facto leader, Jay Y. Lee, was arrested and put on trial for his alleged involvement in a massive corruption scandal that led to the impeachment of former President Park Geun-hye.

Analysts said Lee's alleged involvement in the corruption scandal will unlikely have any major impact on Samsung's global brand, while the effects from the Note 7 appeared to be ebbing away, as per recent earnings numbers. Samsung said last month it will sell refurbished versions of the handsets that taken off shelves due to the fire-prone batteries.

On March 29, Samsung unveiled its latest flagship Galaxy S8 handset which, analysts reckon, could give the mobile business a significant boost in the coming quarters.

The smartphone has a host of top-of-the-line features and its display screens were rated the best ever on a smartphone according to a research company that tests displays.

The same next-generation display may also make its debut on the newest iPhone later this year. South Korean media reported earlier this year that Apple placed a display order for about 160 million OLED panels to Samsung Display for their latest iteration of iPhones that are expected to have OLED display.