LG finally shows smartphone pulse

The Korea Times

The Korea Times

Business

Fri, December 1, 2023 | 10:04

LG finally shows smartphone pulse

Posted : 2011-04-27 16:22

Updated : 2011-04-27 16:22

After being kicked in the teeth by rivals such as Apple and Samsung Electronics in the lucrative market for smartphones, LG Electronics now looks to close the gap thanks to the popularity of its latest gadgets like the Optimus handset. / Korea Times

Korean technology giant posts Q1 operating profit as handset loss narrows

By Kim Yoo-chul

LG Electronics posted an operating profit for the January-March period after two consecutive quarterly losses, thanks to an improving mobile-phone business, the company said Wednesday.

Perhaps LG has finally got a clue in the lucrative smartphone market, where it has been thoroughly overwhelmed by rivals like Apple and Samsung Electronics.

LG, the world's third-largest handset vendor and No. 2 television set maker, reported a first-quarter operating profit of 131 billion won (about $121 million), recovering from a record 246 billion won loss in the preceding quarter.

The company's operating loss from its handset division narrowed to 101 billion won from 262 billion in the fourth quarter, helped by the solid performance of high-end products like the Optimus 2X and Optimus Black smartphones.

LG's television division swung to a profit of 82 billion won from a 65 billion won loss in the preceding quarter, LG said in a regulatory filing.

Despite the improvement in its mobile business, LG still reported a net loss of 15.8 billion won for the first quarter, although this was a sharp improvement from the 256.4 billion won loss posted in the fourth quarter.

LG’s first-quarter operating profit represented nearly a 73 percent decline from the 481.1 billion won in the same period last year, while its sales fell to 13.16 trillion won from 13.22 trillion during the span.

LG's struggles in the smartphone market led to the ousting of former chief executive officer (CEO) Nam Yong in October last year.

Replacing him was Koo Bon-joon, a technology industry veteran and brother of LG Group Chairman Koo Bon-moo, who company officials say is making his presence felt with his assertive style of leadership and quick decision-making.

``The most important thing is that our smartphone business has narrowed its losses. We have been focusing on providing products with a wealth of features, sophisticated technology and innovative designs and these efforts seem to be making a difference,’’ said LG spokesman Yoon Won-il.

``Our performance in televisions inspire confidence as well, and we like how we are doing in nascent markets like three-dimensional (3D) and Internet-connected sets,’’ he added.

LG sold 24.5 million handsets worldwide during the first quarter. Yoon said that its Optimus One smartphones, priced more generously than rival products, are selling particularly well in North America.

``The small operating profit was widely expected. LG will see better results in the second quarter with consumers warming to its smartphones,’’ said Han Eun-mi, an analyst at Hi Investment & Securities.

``LG’s smartphone lineup is crucial to its turnaround in terms of the value of its stock, as the limited smartphone offerings under Nam nearly blew the company out of the water in the lucrative segment.’’

Challenges remain

Aside from smartphones, LG also has high hopes for high-end television units, such as 3D flat-screens built on its film-type patterned retarder (FPR) technology that allows it to make cheaper products than those of its rivals.

The company also claims that FPRs allow sharper stereoscopic images with less overlap and flickering.

LG has formed partnerships with global electronics giants like Philips, Vizio as well as television makers from China to prove FPR as a mainstream technology for 3D television.

LG officials claim that the sales of its 3D television products contributed visibly to the company’s 82 billion won operating profit in the segment for the first quarter.

However, LG still trails domestic rival Samsung, which is the world’s largest television maker, in 3D television sets.

``We’ve learned that Sony may adopt LG’s 3D technology soon, while LG has started shipping its 3D panels to Hewlett-Packard (HP) and Dell for their laptop computers. But it remains to be seen whether such deals would be significant enough to shake the industry’s current supremacy,’’ said Kwon Seong-ryeol, an analyst at Dongbu Securities.

Analysts expect LG to improve its global smartphone share to 5 percent by the end of this year. That would still trail Samsung’s predicted 14 percent and Apple’s 20 percent.

LG has a competitive edge in home appliances such as freezers and washing machines. The division reported 102 billion won in operating profit during the latest quarter, an increase of 78 billion won from the preceding one.

``We are seeing the demand for home appliances will steadily rise in the current quarter despite external concerns such as the impact of the massive Japan earthquakes and financial troubles in southern Europe,’’ said LG’s Yoon.

yckim@koreatimes.co.kr