(Adds divisional performance, outlook comments and capital spending budget for 2010.) By Evan Ramstad and Jung-Ah Lee

SEOUL -(Dow Jones)- Samsung Electronics Co. (005930.SE) on Friday said it earned 3.05 trillion won ($2.63 billion), in the fourth quarter, a slight loss of momentum as it ended a whipsaw year in which it rebounded from its first quarterly loss and recorded its second-highest annual profit.

The performance in the most recent period fell short of the record KRW3.72 trillion quarterly profit that Samsung posted in the third quarter. The company experienced a smaller-than-usual boost in fourth-quarter sales. Meanwhile, gains in the operating profit of its chip and phone businesses weren't enough to offset a sharp narrowing in its TV-related businesses.

But the latest result was a major improvement from the KRW20 billion loss in the fourth quarter of 2008. That was Samsung's first net loss since it started reporting quarterly results in 2000.

Samsung painted an upbeat picture noting that profitability will improve in the traditionally slower first quarter due to strong chip prices and lower marketing costs.

"We see this positive growth and performance flowing on into 2010 as the global economy continues to stabilize," said Robert Yi, head of investor relations.

Sales in the latest quarter was KRW25.32 trillion, up 37% from KRW18.5 trillion a year earlier. The company reports its net profit using Korean accounting standards that leave out the effect of some overseas units.

Samsung will switch to international accounting standards beginning in the first quarter. In preparation for the change, the company has reported some of its results on a consolidated basis. Under that method, Samsung said its fourth-quarter operating profit was KRW3.7 trillion and sales amounted to KRW39.24 trillion.

The biggest improvement came in Samsung's chip business, which boosted its operating profit margin to 22.6%, its highest level since 2006, from 18% in the third quarter and a loss in the year-ago period. Samsung is the world's largest maker of memory chips.

The company's cellphone business, which is the world's second-largest after Nokia Corp., reported an operating profit margin of 8.3%, up from 7.7% in the third quarter and 2% in the year-ago period. Samsung said it shipped 68.8 million units in the quarter, up from 60.2 million in the third quarter and 53 million a year earlier.

But the operating profit narrowed in Samsung's liquid crystal display business, which supplies screen components to itself and other electronics firms, and in the division that manufactures TVs. In the LCD business, the operating profit margin fell to 7% from 15% in the third quarter. In the consumer electronics division, the company reported an operating loss, similar to last year, but a comedown from the 17% operating profit margin of the third quarter.

For the full year, Samsung said it earned KRW9.65 trillion, up from KRW5.53 trillion in 2008. The annual profit far exceeded all other years except for 2004, when it posted a record profit of KRW10.79 trillion. Annual sales amounted to KRW89.8 trillion, a record and up from KRW72.95 trillion in 2008.

Samsung said it expects consolidated capital expenditure to expand significantly this year, increasing its estimate for its chip business to more than KRW5.5 trillion. This is an effort to meet growing demand and to further transition to more advanced 30-nanometer process technology, it said. It maintained its previous forecast of KRW3 trillion in capital outlays for its liquid crystal display business.

In 2009, its consolidated capital expenditure reached KRW8.1 trillion including KRW4.5 trillion for the chip business and KRW2.1 trillion for the LCD business.

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