SEOUL (Reuters) –
Samsung Electronics (005930.KS), the world's top maker of memory chips and LCD screens, reported on Friday its best ever quarterly net profit on a resurgent memory sector and forecast a strong 2010.

Samsung, which forecast strong quarterly earnings earlier this month, made a spectacular turnaround this year, riding a sector recovery and wrestling market share from global rivals, sending its stock to a record high last month.

"Samsung has made great progress in strengthening its market leadership throughout 2009, and we believe the outlook is positive for further growth as the global economic recovery continues into 2010," Robert Yi, Sansung's head of investor relations, said in a statement.

Still, the company and Korean peers such as LG Electronics (066570.KS) may be hit by a recovery in the won and rising competition.

"We forecast a solid fourth quarter supported by seasonal demand for consumer electronics, though the appreciation of the won and increased marketing expenses may lead to a quarter-on-quarter decline in profit," Yi said.

Samsung's July-September net profit rose to 3.72 trillion won ($3.14 billion) from 1.22 trillion won a year ago, beating an average forecast for 3.34 trillion won from Thomson Reuters I/B/E/S.

It was Samsung's best-ever quarterly result, exceeding its previous record net profit of 3.14 trillion won in the first quarter of 2004.

Consolidated quarterly operating profit was 4.23 trillion won, better than a forecast for 3.92 trillion won and well above last year's 1.48 trillion won.

By 0056 GMT, Samsung's shares rose 0.7 percent versus the wider market's (.KS11) 0.2 percent rise, cutting earlier gains, as some investors adopted a cautious stance regarding its fourth-quarter results.

Shares in South Korea's biggest company rose 59 percent this year through Thursday, beating a 41 percent gain in the broader market. (Reporting by Marie-France Han and Rhee So-eui; Editing by Jonathan Hopfner and Anshuman Daga)

NEW YORK (Reuters) –
CIT Group (CIT.N) is likely to file for bankruptcy in the coming days, analysts and experts said.

The lender to small and medium-sized businesses is trying to restructure its debt, and is offering investors two options.

One path would be getting its unsecured debt holders -- who hold a total of about $30 billion -- to voluntarily exchange their bonds for new securities and equity. That path would avoid a bankruptcy filing.

The other and more likely option would be approving a reorganization plan before the company files for bankruptcy. CIT had about $70 billion of assets and $65 billion of total debt in the middle of this year, according to the latest publicly available figures.

CIT investors are entitled to vote for the exchange or the prepackaged bankruptcy by the end of Thursday. CIT spokesman Curt Ritter declined to comment.

The company has $800 million of debt due on November 1 and 3, and total liabilities as of mid-June of $64.9 billion.

Sources familiar with the matter have told Reuters that the voluntary debt exchange is unlikely to happen, and bankruptcy is much more likely.

Analysts have argued that the debt exchange was doomed from the start, because it required too many different kinds of investors with too many competing interests to comply.

"The market is by and large sending signals that a prepackaged is the most likely outcome, and it makes sense given the exchange offer," said Kevin Starke, senior analyst at boutique brokerage CRT Capital Group.

If the company files for bankruptcy, it will likely try to complete the restructuring process as quickly as possible, experts said. In general, borrowers prefer to borrow money from lenders they are confident will be around for the life of the loan.

"A business like this has to get in and out of bankruptcy fast, because if they're lingering, I would think competitors would start poaching customers," said Stephen Lubben, a law professor at Seton Hall's School of Law who focuses on corporate finance and financial distress issues.

The plan needs to win approval from investors holding two-thirds of the company's debt, and half of the number of investors.

Activist investor Carl Icahn is encouraging individual investors to vote against CIT's prepackaged bankruptcy plan. The company hopes its plan will eventually help it fund more new business out of its bank but Icahn wants the company to stop planning to make new loans and use its maturing assets to pay off its debt.

A prepackaged bankruptcy requires the approval of investors holding two-thirds of the dollar amount of every type of debt. Of the voting investors, one half by number must also approve.

Icahn has tried to rally retail investors to vote against the plan, in an effort to ensure that CIT does not get half of voting noteholders to approve the deal.

(Reporting by Dan Wilchins; Editing by Gary Hill)

WASHINGTON (Reuters) –
The Federal Reserve should lose its authority to bail out big, failing financial firms like AIG and Bear Stearns under proposed reforms aimed at limiting the collateral damage from such failures, U.S. Treasury Secretary Timothy Geithner said on Thursday.

Geithner, in testimony to the U.S. House of Representatives Financial Services Committee, said the Fed should keep its ability to act as an emergency lender of last resort, but only to solvent firms in times of severe stress in financial markets -- with Treasury consent.

"Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure," Geithner said. "The proposed resolution authority would not authorize the government to provide open-bank assistance to any failing firm."

Geithner said a bill by the Financial Services Committee's chairman, Representative Barney Frank, meets the tests for key elements of a resolution authority that the Obama administration would like to see passed.

It is a "comprehensive coordinated answer to the moral hazard problem" and does not provide any implicit guarantees for financial institutions, he said.

"We cannot put taxpayers in the position of paying for the losses of large private financial institutions," Geithner said. "We must build a system in which individual firms, no matter how large or important, can fail without risking catastrophic damage to the economy."

Geithner said large failing firms should be put into a receivership managed by the Federal Deposit Insurance Corp that would seek to "unwind, dismantle, sell or liquidate the firm in an orderly way" where losses would be borne by shareholders and creditors of the firms.

The costs of such shutdowns would be borne by other large financial firms, imposed afterward, Geithner said. This would eliminate a standing insurance fund that creates expectations that the government would step in to protect creditors and shareholders.

Regulators also must impose tougher capital and liquidity standards on large firms that take on more risk, Geithner said, to reduce the probability of a larger firm experiencing financial distress.

But Geithner said there would not be a set list of large firms held to higher standards, adding that the government did not want to provide a false impression that such firms would be protected from failure by the government in times of stress.

(Reporting by David Lawder; Editing by Andrea Ricci)