7/28/2010 11:46:00 AM
LG’s handset division reports a loss for first time in four years
LG’s handset division has posted a loss of 120 billion won (£64m) for the second quarter ended 30 June.
The loss comes despite a sequential increase in handset shipments by 13% during the quarter to 30.6 million units.
The mobile division of LG Electronics has not made a loss for four years.
Overall, the company suffered a sharp 33% decline in profit year on year. The manufacturer of the LG Cookie saw net profit decline from 1.28bn won to 856.4bn won (£463m), year on year.
Strategy Analytics director of wireless practice Neil Mawston said: ‘LG’s profitability has been heading from positive to negative for the last three or four quarters. LG has a weak product portfolio in the sub-segments such as smartphones and in 3G devices. Other manufacturers such as Samsung, Apple, RIM and Nokia have been taking share from LG.
‘Motorola and Sony Ericsson have started attacking LG in the 3G devices segment. The LG brand is fine, it really comes down to the products they are offering. The LG Cookie is a feature phone rather than a smartphone and despite high volume sales it is not necessarily generating profit.
He added: ‘LG looks very similar to Motorola at the moment. Motorola relied on the Razr and ended up in a similar position. LG needs a flagship smartphone to replace the Cookie. This is LG’s first major downturn since the 1990s and this will be a real test to see how they cope with it.’
LG said in a statement that it expected to see modest growth in Q3 2010. It added: ‘LG will continue to introduce new products in major categories including smartphones, while investing aggressively in R&D and marketing and developing premium products in order to secure a stronger position in respective categories.’