LG’s handset division reports second consecutive quarterly loss in Q3

LG’s handset division reports second consecutive quarterly loss in Q3

LG’s mobile phone division racked up its second consecutive loss in Q3 2010, plunging further into the red to the tune of 304 billion won (£169 million) for the quarter ending 30 September.

The division fell into the red for the first time in four years in Q2 when it posted a loss of 120 billion won (£64 million). The difficulties encountered by the handset division in 2010 are highlighted by the fact that it posted a profit of 460 billion won (£256 million) a year ago in Q3 2009.

Revenue in Q3 fell by 11.9% on the previous quarter to 2,971 billion won from 3,373 billion won and was down 31.9% year on year from 4,360 billion won.

Shipments declined 7% quarter on quarter and 10% year on year to 28.4 million units. The company stated that in North America and Europe shipments declined due to weak demand in Europe and the continuous increase in smartphone demand.

It added that profitability was lower due to a decline in sales in developed markets, a decline in average selling price and continued investment in R&D.

Looking forward to Q4 results, LG said it expected to increase shipments by 13% quarter on quarter to 307 million units due to seasonal demand.

In developed markets, the company has been suffering from a poor high end smartphone portfolio, making it difficult to compete with new smartphones from the likes of Apple, RIM, HTC, Samsung and Sony Ericsson.

It is placing a great deal of hope in its newly launched Optimus range of handsets, such as the Optimus One and Chic and the just released Optimus Windows Phone 7 handset.

In September, LG Mobile CEO Skott Ahn confirmed that the company was working on a tablet device, but would not say when it was expected to hit the market.

Overall, LG Electronics saw its EBITDA drop 90% year on year to 113 billion won, down 73% on the previous quarter. Sales were down 2.1% year on year to 13.43 trillion won and down 6.8% on the previous quarter.

Written by Mobile Today
Mobile Today


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