A teaser of LG’s Prada 3.0 smartphone, which is a collaboration of LG Electronics and the Italian fashion house, is seen in this file photo. The new Prada smartphone will make its debut next year. / Korea Times file |
Company poised to challenge Samsung, Apple smartphones
By Kim Yoo-chul
 For LG Electronics the worst appears to be over, with the company improving its bottom line and productivity from an impressive sales increase in smartphones.
A surge in consumers buying LG-branded TVs and smartphones has put the LG Group’s electronics affiliate on track to report better earnings.
With better products being released this year and a strengthening tie-up with strategically-important overseas clients, LG officials said a turnaround is in sight.
LG’s handset division has been in the red for the past six quarters and has been a major roadblock in earnings, while LG Electronics, which is faring relatively better than its Japanese rivals, is however facing stiffer competition amid slowing global demand.
But one noticeable change is that executives are showing signs of confidence for a steady improvement in smartphone revenue and global marketing chief Kang Shin-ik is the most recent high-profile figure to have expressed growing optimism.
``LG smartphones are now effectively competing with market leaders. LG experienced difficulties in just following our competitors due to the late entry into smartphones. But we’ve changed,’’ Kang told The Korea Times, recently.
The remarks may have been rhetoric to investors in the past, however, the executive said he puts his LG smartphone on the table at private meetings now, a major change as Kang had once felt ashamed of them.
``So far this year, LG has suffered from deteriorating financial soundness due to our smartphone problems. But I believe a company has ups and downs in business cycles, and the situation is now on our side,’’ said Kang.
During the third quarter, LG had a 413.9 billion won net loss, reversing from a net profit of 7.6 billion a year ago, the company said in a regulatory filing to the Korea Exchange (KRX).
Total handset shipments during the last quarter decreased to 21.1 million from 24.8 million in the second quarter, while the division’s operating loss margin expanded to 5.2 percent from 1.7 percent.
Kang didn’t specify the names of key rivals in the leadership in smartphones, though he said LG has advanced to create more buzz in the market currently led by cross-town rival Samsung.
The groundwork has already been laid. LG’s mobile chief Park Jong-seok is showing more attention to strengthening tie-ups with Internet giant Google to help its Android eco-systems become stronger.
``Park and Google Executive Chairman Eric Schmidt discussed several pending issues during Schmidt’s recent visit to Korea and they agreed to boost their partnership. Google regards LG as one of its most important allies,’’ said an LG official.
The world’s third-largest handset maker has also recently renewed its partnership with Prada to release a new smartphone next year.
The tentatively-named ``Prada 3.0’’ will make its international debut sometime in the first half of 2012.
The new phone is the third from LG and the Italian fashion house ― the first was in 2006.
LG produced two premium handsets with feature-based functionalities including the world’s first touchscreen mobile in 2007.
Officials didn’t disclose specific details such as the possibility to adopt an advanced mobile technology, though there are some rumors that the Prada 3.0 will support the current and next mobile technologies.
Increased sales of advanced LG smartphones that support Long Term Evolution (LTE) mobile technology are additionally helping the corporate turnaround.
LTE is considered the next-generation wireless mobile technology that will eventually replace the current 3G-based networks. LTE provides better speed and is becoming popular amid the rise in speed-intensive smartphones.
In LTE, LG is not a loser. It has sold over 200,000 Optimus LTE smartphones since its launch, which market analysts say is ``quite impressive,’’ considering Samsung Electronics’ sale of some 300,000 Galaxy S II LTE devices.
``It was crazy but in a good way. We know LTE-supported smartphones are the way to go,’’ said LG Electronics spokesman Lee Hyung-keun.
LG’s LTE patents portion globally is over 23 percent, valued at $7.9 billion or 9 trillion won, according to officials. It is the largest patent-holder in LTE technology, though LG officials declined to elaborate further.
In televisions, a conventional cash-cow for LG Electronics, the company is pushing its in-house FPR 3D technology due to its lead in the key Chinese and North American markets.
In the upcoming Consumer Electronics Show (CES), the world’s biggest technology exhibition held annually in Las Vegas, LG Electronics plans to exhibit variants of its premium TV sets that could possibly include a 55-inch OLED TV.
TV chief Kwon Hee-won will hold a press conference with South Korean media and unveil updated business strategies such as renewed partnerships with content providers for smart televisions and short- to mid-term business plans.
LGs handset and TV business account for more than 60 percent of the company’s total revenue.
Rights offering issue
The recent decision by the company to raise 1 trillion won via a rights offering drew much debate, however, the campaign looks favorable according to analysts.
LG said the decision was made in order to raise funds to invest in key businesses.
60 percent of the cash has been set aside for smartphones, LG said in a statement.
``We see that is pre-emptive financing in preparation for worse financial market conditions,’’ Citi Investment Research & Analysis, said in a report to clients.
The U.S.-based brokerage said that it doesn’t see any imminent liquidity issues for LG despite a recent credit rating downgrade as the company intends to secure buffer cash in preparation for a worst-case credit squeeze situation.
``Market concern on a liquidity crunch is also overblown, in our view,’’ it said.
Another U.S.-based investment bank, JPMorgan, said LG’s latest decision was a surprise and has said it was a ``negative’’ for LG’s share price in the short-term
``Although this unexpected rights offering could hurt investor sentiment, we think it will eventually help its financials while its fundamentals remain unchanged,’’ said the bank, adding it recommends investors accumulate the stock on weakness rather than participate in panic selling.
Next year will be important for LG Electronics to fully gain investor confidence. Despite uncertainties in global economies, the electronics market is expected to grow helped by more demand for smart devices and manufacturers’ pushes for aggressive pricing.
Also, the upcoming 2012 Summer Olympics in London is expected to spur idling consumer demand for gadgets, giving LG a good chance to improve its bottom line.
``What LG needs is execution with the right timing. It’s been improving slowly, however, the recovery pace needs to be accelerated with it has competitive product lineup.’’
|
‘3초면 환자 죽일 수도…’ 막말 간호사 논란
-Children's-Day.jpg)
