For the fourth quarter, the Suwon, South Korea-based company reported net income of KRW 2.35 trillion ($2.45bn), down 8.2% from KRW 2.56 trillion ($2.72bn) in the year-ago quarter. Sales rose a modest 1.1% to KRW 15.69 trillion ($16.69bn) from KRW 15.52 trillion ($16.51bn).

In the fourth quarter, key products powered a recovery in overall earnings despite price declines in some product categories, said Dr Woosik Chu, senior VP and head of investor relations.

Samsung Electronics is made up five operational divisions: Semiconductor, LCD, Telecommunication, Digital Media, and Digital Appliances.

Semiconductors are the core division, and the company is the world’s largest memory chipmaker. Sales here rose 10% sequentially in the quarter to KRW 5.42 trillion ($5.77bn), and 4% year-on-year to KRW 19.08 trillion ($20.34bn).

Samsung makes both DRAM chip used in personal computers, as well as NAND chips, commonly found in MP3 players and digital cameras. This rise in sales for its chip unit came despite falling prices in the fourth quarter, and the 19% decline in the fourth quarter of the average selling price for its NAND flash memory chips.

Over the years Samsung has invested heavily in flat panels, and is now one of the world’s biggest makers of flat-screen televisions. It is also the largest supplier of liquid crystal displays used in other manufacturers’ TV sets, as well as in laptops and mobile phones. During the fourth quarter sales at this division rose 6% to KRW 3.18 trillion ($3.38bn), and 21% year-on-year to KRW 11.70 trillion ($12.45bn).

However, the news was not quite as good for Samsung’s three remaining divisions. Samsung is the world’s third largest mobile phone manufacturer, but sales at its telecommunications unit declined 1% in the fourth quarter to KRW 4.65 trillion ($4.95bn) and fell 3% year-on-year to KRW 18.24 trillion ($19.4bn), despite it selling a company record 32 million handsets during the quarter. Sales at the Digital Media division, which includes printers, computers, and monitors, fell 12% to KRW 1.45 trillion ($1.54bn) in the fourth quarter and 3% year-on-year to KRW 6.30 trillion ($6.7bn). Sales at the Digital Appliances division (kitchen white goods) fell 5% to KRW 0.79 trillion ($840m), and 9% to 3.09 trillion ($3.28bn) year-on-year. Samsung has also been feeling the effects of the strong Korean Won and the weak US dollar.

Looking forward, Samsung adopted an upbeat outlook and said it expects sales in 2007 to rise 8% to KRW 63.6 trillion ($67.6bn). But it warned that conditions in the first half of the year would remain tough.

The first quarter is a traditionally a slow season, said a company spokesperson, but we expect developments such as the introduction of Windows Vista to help lessen the seasonal impact compared to previous years.

Samsung also said it would buy back 2.8 million common shares and 400,000 preferred shares between January 16 and April 15 in order to enhance shareholder value, spending about KRW 1.81 trillion ($1.92bn).

For the year ended December 31, Samsung reported net income up 7.6% at KRW 7.93 trillion ($8.43bn). Sales meanwhile rose 6.4% to KRW 58.97 trillion ($62.73bn).