Shareholders' meeting mentions no plan for mobile division
By Kim Bo-eun
No official word on LG Electronics' plans for its smartphone business emerged at its general shareholders' meeting held Wednesday. A top-level executive only reiterated LG's earlier position, that "all possibilities have been left open."
LG is widely expected to scrap its ailing smartphone business that has consistently posted losses for nearly six years.
Neither CEO Kwon Bong-seok nor mobile communications division head, Lee Yeon-mo, was present at the meeting. CFO Bae Doo-yong simply said, "we are reviewing the matter from multiple angles."
When LG implied earlier that a sell-off of the mobile division could take place, Vietnam's Vingroup was the entity to acquire the business, sources told The Korea Times. Vingroup, the largest listed firm in the Southeast Asian country, owns a subsidiary in the smartphone business ― VinSmart. Both VinSmart and LG have a smartphone production base in Vietnam's industrial city of Haiphong. LG attempted to sell its mobile manufacturing plants in Vietnam and Brazil to Vingroup while holding onto its patents in mobile phones.
But talks with potential buyers failed to make progress, one of the sources said. Earlier, The Korea Times reported that talks with Vingroup collapsed over differences in the sale price.
With no other apparent entities interested in the takeover, the only viable remaining option is LG's decision to dissolve the business. LG's mobile business has suffered losses for 23-consecutive quarters since the second quarter of 2015. This has accumulated to 5 trillion won as of the end of 2020. LG accounted for 2 percent of global smartphone sales last year, selling 24.7 million handsets.
According to LG, the mobile division told employees earlier this month that efforts would be made to reach a decision by the end of this month. Reports stated a decision could be made at a board meeting slated to be held April 5. An LG Electronics spokesperson said he could not confirm that the meeting will be held.
"The mobile division said efforts would be made to reach a decision by the end of this month, but this does not promise anything," he said.
LG, meanwhile, is on track to select its vehicle solutions business as its next growth engine.
The shareholders' meeting approved the move to separate the electric vehicle (EV) power train business from LG's vehicle solutions division to set up a joint venture with Canadian auto parts maker, Magna International. LG Electronics holds a 100-percent stake in the new entity, LG Magna e-Powertrain, and Magna is set to acquire a 49 percent stake. The joint venture will be launched in July.
Vehicle solutions is one of the businesses LG has set as its engines of future growth, along with EV batteries and artificial intelligence. LG Chem last year spun off its EV business into a new entity, LG Energy Solution.
Employees of LG's mobile division are expected to be repositioned at these affiliates as well as LG's vehicle solution division, in case the decision is made to close down the section. The mobile division had 3,700 employees as of the end of the third quarter of 2020.
LG Electronics' stock price closed at 146,500 won, Wednesday, up 0.69 percent from the previous day's close. Stocks spiked to an all-time high of 193,000 won in January after the company unveiled plans to set up the joint entity with Magna and implied it could sell-off its struggling mobile phone business.
By Kim Bo-eun
 |
| LG Group's headquarters in Yeouido, Seoul / Yonhap |
No official word on LG Electronics' plans for its smartphone business emerged at its general shareholders' meeting held Wednesday. A top-level executive only reiterated LG's earlier position, that "all possibilities have been left open."
LG is widely expected to scrap its ailing smartphone business that has consistently posted losses for nearly six years.
Neither CEO Kwon Bong-seok nor mobile communications division head, Lee Yeon-mo, was present at the meeting. CFO Bae Doo-yong simply said, "we are reviewing the matter from multiple angles."
When LG implied earlier that a sell-off of the mobile division could take place, Vietnam's Vingroup was the entity to acquire the business, sources told The Korea Times. Vingroup, the largest listed firm in the Southeast Asian country, owns a subsidiary in the smartphone business ― VinSmart. Both VinSmart and LG have a smartphone production base in Vietnam's industrial city of Haiphong. LG attempted to sell its mobile manufacturing plants in Vietnam and Brazil to Vingroup while holding onto its patents in mobile phones.
But talks with potential buyers failed to make progress, one of the sources said. Earlier, The Korea Times reported that talks with Vingroup collapsed over differences in the sale price.
With no other apparent entities interested in the takeover, the only viable remaining option is LG's decision to dissolve the business. LG's mobile business has suffered losses for 23-consecutive quarters since the second quarter of 2015. This has accumulated to 5 trillion won as of the end of 2020. LG accounted for 2 percent of global smartphone sales last year, selling 24.7 million handsets.
According to LG, the mobile division told employees earlier this month that efforts would be made to reach a decision by the end of this month. Reports stated a decision could be made at a board meeting slated to be held April 5. An LG Electronics spokesperson said he could not confirm that the meeting will be held.
"The mobile division said efforts would be made to reach a decision by the end of this month, but this does not promise anything," he said.
LG, meanwhile, is on track to select its vehicle solutions business as its next growth engine.
The shareholders' meeting approved the move to separate the electric vehicle (EV) power train business from LG's vehicle solutions division to set up a joint venture with Canadian auto parts maker, Magna International. LG Electronics holds a 100-percent stake in the new entity, LG Magna e-Powertrain, and Magna is set to acquire a 49 percent stake. The joint venture will be launched in July.
Vehicle solutions is one of the businesses LG has set as its engines of future growth, along with EV batteries and artificial intelligence. LG Chem last year spun off its EV business into a new entity, LG Energy Solution.
Employees of LG's mobile division are expected to be repositioned at these affiliates as well as LG's vehicle solution division, in case the decision is made to close down the section. The mobile division had 3,700 employees as of the end of the third quarter of 2020.
LG Electronics' stock price closed at 146,500 won, Wednesday, up 0.69 percent from the previous day's close. Stocks spiked to an all-time high of 193,000 won in January after the company unveiled plans to set up the joint entity with Magna and implied it could sell-off its struggling mobile phone business.
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