New smartphones key for LG

27 January 2011

SEOUL: LG has announced losses for the fourth quarter due to a sharp contraction in its mobile phone division, but plans to launch new smartphones to drive a return to profit.

The mobile division lost 274.1bn won ($245m, €180m), while the company lost 256.4bn won - the firm's first quarterly loss in two years.

Year-on-year, the total number of phones shipped was 10% down at 30.6 million, while per-handset revenue was off 15%.

But revenues for the firm's home entertainment division - which is almost twice the size of the mobile phone division and generates around 40% of the company's total revenues - rose by 5%.

As reported on Warc News in December, the iPhone has proved a success in LG's home territory, enjoying sales of roughly 1.6m units since its launch in November 2009.

While Apple has a Korean market share of just over 3%, this share is made up of the lucrative and rapidly-growing demographic of smartphone users.

Speaking to Bloomberg, Peter Yu at BNP Paribas SA said: "When the iPhone was introduced, the Korean companies were in a state of denial, they underestimated the potential."

LG's Android-powered Optimus smartphone range is now set to be expanded over the months to come as the Korean firm shifts its focus away from lower-end 2G phones.

The company launched the Optimus 2X in Korea earlier this month as part of this strategy.

"LG's handset business is expected to turn around in the first quarter and profitability will sharply improve as it launches smartphones such as the Optimus 2X and Optimus Black," SH Lee, a Mirae Asset Securities analyst, told AFP.

Data sourced from LG/Bloomberg/AFP; additional content by Warc staff