Red Alert: LG Stumbles $366M As Smartphones Flop

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Don’t call us, we’ll call you is what consumers appears to be saying as LG falls into loss making territory in Q3 with extreme failure to garner momentum in the smartphone sphere. The South Korean giant posted net losses of 414 billion Korean won or US$366 million, blamed on its crumbling phone business, although display business also recorded losses.

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This compared to $8bn loss just a year ago for the third largest phone maker in the world. The figure also marks the first loss of the year under new vice chairman Koo Bon-joon, appointed in October last year.

Operating loss of 31.9 billion won or US $28.18 million were also reported by LG, yesterday.

Q3 sales for 3D TV maker were US $11.4bn on the back of poor  display sales and consumer electronics due to the poor global economy dampening demand.

Average selling prices also dropped. 

And despite LG being among the top Aussie TV brands, LG’s Display as well as Electronics and Inotech divisions all closed to losses this quarter.

Recently, LG announced a powerful dual core 1.5GHz processor  4.5″ Optimus LTE in its native Korea although many analysts feel it is too little too late in a world dominated by other Android carriers like Samsung, HTC as well as the iOS iPhone. 

As an Android carrier, LG sits as a midrange handset but failed to keep apace with the success of its rivals, despite the droid’s 550K new add-on users a day.

Its mobile communication unit  saw operating losses slip further and the cumulative deficit incurred by LG smartphones was 991.3 billion won (876 million dollars).

4G Ahoy

LG are now putting all their eggs into the next generation 4G LTE technology and 3D smartphones, believing “the situation will turn in our favor once the market for 4G LTE phones matures. We are ahead of our rivals in LTE patents and technology.”

It released its 3D Optimus here in last August.

LG CEO Koo Bon Joon says his company will also push 3D and smart televisions a swell as its Optimus smartphones in the fourth quarter and expects heavy discounting to be a common theme among vendors over the holiday season.

Some analysts appear to think LTE could lead the way for the Optimus maker: “The problem was the delayed release of mid-price smartphones following Optimus One. If LG succeeds with its Optimus Net and premium long-term evolution (LTE) phones, its earnings can jump immediately,”Lee Sun-hak, an analyst at Mirae Asset, said.

 

However, others are less convinced, blaming their lack of swift response to competitors like Apple and Samsung, in particular this quarter when Apple’s iPhone 4S was released was a fatal mistake.

“LG was slow to embrace the smartphone market, and they are still having a hard time correcting the mistake,” said Lim Han Eui, a telecommunications consultant at ROA Consulting in Seoul.

“There has been nothing particularly special about their phones. They need to develop their own colour and identity.”

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