By Kim Yoo-chul
After years of trailing rivals Samsung Electronics and Apple, LG Electronics may feel it’s finally getting the hang of the cutthroat smartphone market. It bears further watching, however, whether it has enough momentum to overcome its poor start.
It has been struggling in its main markets of consumer electronics and mobile phones in recent years but rebounded with a fourth-quarter profit last year. Most encouraging is that smartphones finally joined its money-making products.
LG Electronics’ Optimus brand of smartphones has been enjoying increasing sales in major markets like North America and Europe, as the company looks to eat into the Samsung-Apple duopoly.
It’s too early to judge whether the comeback in smartphones is legit or a set up for inevitable disappointment. But the company clearly has more believers than it did months ago.
``We expect LG Electronics to sell 37.3 million smartphones this year, which would represent an 85 percent improvement from 2011,’’ said Solomon Investment analyst Lim Dool-yi.
Smartphones, which provide higher margins than conventional handsets, will account for nearly 37 percent of LG Electronics’ mobile phones shipped this year, compared to last year’s 23 percent, Lim said.
LG reported operating profit of 23 billion won (about $20 million) for the three months through December, rebounding from a loss of 32 billion won in the third quarter and a loss of 246 billion won in the same period a year earlier.
The company’s handset division posted 9.9 billion won in operating profit, compared to a 262 billion won loss a year ago and stemming a depressing streak of six consecutive quarters in the red.
``Optimus has saved us,’’ LG Electronics spokesman Yoon Won-il said. The company’s overall handset shipments dropped to 17.7 million in the fourth quarter from 21.1 million in the third as the company reduced its lineup of feature phones to push smartphones.
It is providing various Optimus models that run separate versions of Google’s Android mobile operating system for third-generation (3G) and Long Term Evolution (LTE) networks.
``LG Electronics finally has room to breathe in terms of smartphones. However, a truer test could come in 2012 as it’s hard to predict whether it can maintain profit in the division for the first quarter,’’ said a Seoul-based analyst.
LG Electronics is the world’s second-largest flat-screen television maker behind domestic rival Samsung and its fourth-quarter results show that, unlike in mobile phones, it hasn’t deteriorated.
LG’s television business returned to a profit of 150 billion won on the back of solid sales during the year-end holiday season in the United States. The company believes its cost-effectiveness in televisions supporting 3D content will be a strength in the foreseeable future.
``Our television business is looking good as our patented film-pattered 3D technology, which provides sharper images with less overlap and allows for cheaper glasses, is beginning to be accepted by others like Panasonic and Sony,’’ said an LG Electronics executive.
The television division, led by President Kwon Hee-won, plans to sell more 3D-enabled sets, and the company has confirmed it will start the sale of organic light emitting diode (OLED) televisions from the latter half of this year.
OLED TVs are regarded as the ultimate next-generation item as they’re thinner than conventional LCD models and provide more vivid and sharper images.
LG’s home appliance business reported 64.6 billion won in operating profit for the last quarter, while its air-conditioning and energy solution division posted a 37.9 billion won operating loss hit by rising raw materials costs, stiffer competition and slower demand in developed markets.
LG Electronics said it is aiming to reap 57.6 trillion won in revenue this year, while it fixed this year’s investment plan at 4.2 trillion won including 2.6 trillion won for research and development.