Seoul: Profit at Samsung Electronics, the world's largest maker of memory chips and televisions, fell by a quarter as weak earnings at its flat screen unit dragged, underlying the conglomerate's struggle to return to last year's record profit.

A bleak outlook for computers and TVs and a wobbly global economy is overshadowing robust sales of Samsung's new version of its flagship Galaxy S smartphone, which competes with Apple's iPhone.

Samsung, one of the first major global technology firms to kick off quarterly earnings, is expected to have become the world's top smartphone vendor in the second quarter, overtaking Nokia's more than 10-year reign.

"(The forecast) is slightly better than what the market had been expecting as many had been slashing their forecasts recently due to losses from the LCD division," said Kim Young-chan, an analyst at Shinhan Investment Corp.

"It will be again smartphones which will lead earnings recovery in the second half of this year, although competition may get toughen again in the third quarter when Apple introduces a new iPhone."

Samsung's Galaxy S II has sold more than 3 million units since its debut in late April. Some analysts expect the phone running on Google's Android platform to become Samsung's best-ever model with potential sales of 20 million units.

The global smartphone market is forecast to grow 58 percent this year and the tablet market is likely to quadruple to 70 million units, according to research firm Gartner.

On Thursday, Samsung estimated its quarterly operating profit at 3.7 trillion won (USD 3.5 billion), compared with a consensus forecast of 3.9 trillion won by analysts surveyed.

That would be down 26 percent from a record 5.01 trillion won a year ago and up 25 percent from the preceding quarter.

The company's operating profit was expected to show a downside surprise of 6 percent to 3.6 trillion won, according to Thomson Reuters SmartEstimates, which places more weight on recent forecasts by top-rated analysts.

The technology sector serves as the bellwether for global consumer demand and its outlook has been soured by the debt crisis in Europe and sluggish U.S. job and housing markets.

Samsung will provide detailed quarterly results later this month.

By 0200 GMT, shares in Samsung, Asia's most valuable technology company with a market value of around USD 134 billion, fell 1.7 percent, marking a 0.2 percent fall in the broader market.

Agencies