By Kim Yoo-chul
LG Electronics plans to transfer its money-losing storage business as part of company-wide initiatives to streamline business operations, a company official said Sunday.
The restructuring comes as the company looks to slim down its local mobile division by cutting marketing staff to improve its struggling business.
``LG Electronics is planning to transfer the loss-making digital storage division to Hitachi-LG Data Storage (HL-DS) to improve the profitability of its business,’’ the official said requesting anonymity.
The digital storage division, which has been under the direct control of LG Electronics CEO Koo Bon-joon, makes optical devices such as CDs and DVDs.
The official said the integration of the business will help LG cut costs and boost sales.
An LG Electronics spokesman said the company has been seeking to improve profits amid slowing business growth, adding that some technical matters still remain unresolved.
HL-DS is a joint venture between Japan’s Hitachi and LG, the world’s second-biggest television manufacturer. HL-DS started operation in January 2011 and is an OEM-based manufacturer of optical data storage devices including CDs and DVD drives for desktop and notebook computers.
Since LG Electronics named Koo Bon-joon as its chief executive, the company has cut unprofitable phone models to focus on high-margin products to better compete with its bigger overseas rivals.
HL-DS has been suffering from a steep decline in both revenue and profit since 2007 hit by lackluster demand for CDs and DVDs, according to LG officials.
``LG’s own digital storage division has been asked to find a breakthrough because it needed to cut cost amid meager demand for optical products,’’ said a fund manager from a European based investment bank in Seoul by telephone.
The LG spokesman declined to comment about further plans to restructure operations or even the scale of a possible year-end management reshuffle.
But LG officials and market analysts say LG Electronics will see ``more changes’’ from executives to operations in an upcoming shake-up.
LG Electronics has been strengthening its product lineups from TVs to smartphones. It recently announced an ambitious plan to become the world’s biggest 3D TV maker and is also adding more affordable smartphone models such as the Optimus 3D brand.
LG’s poor performance was highlighted earlier this year when it released its second quarter financial report.
In the first half of the year, LG only managed to sell 10 million smartphones ― Samsung Electronics shifted 19 million in the second quarter alone.
The ongoing poor sales of its smartphones led directly to LG posting its fifth quarterly loss in a row.