Seoul sad to see you go
A couple of years ago Korean manufacturer LG Electronics vowed to overtake Samsung to become the world’s second-biggest mobile phone maker (after Nokia). But that was before it was displaced in 2011 by Apple as the world’s No.3 mobile phone maker (according to IDC). Making it the fourth largest. Now, if the firm’s latest figures are anything to go by, its phone sales are well on the slippery slope and LG may even be forced to pull out of the US market.Figures released yesterday [July 25th 2012] reveal how income plummeted by an annual 28.6 per cent in its mobile comms division, resulting in an operating loss of $49.5 million – its fifth loss in the past seven quarters.
Axing costs helped the LG group overall to report a net profit of $138 million, up 46 per cent from the same period of 2011 – but this was still lower than analysts had forecast.
LG is pinning its mobile hopes on a roll-out of Android phones using the next-generation LTE broadband system.
It plans to release new 4G smartphones in the second half of this year, initially in developed markets such as the USA, Europe and Asia.
It reported shipments of 13.1 million phones in Q2, a 4 per cent drop from Q1, and a significant decline from the 24.8 million shipped in Q2 2011.
The company says that 44 per cent of its mobile phone shipments are now smartphones, an increase from the 39 per cent last quarter.
But analysts remain sceptical about whether LG Mobile can pull outs of current nosdive as it is being squeezed at both ends of the market.
While Chinese handset makers such as ZTE and Huawei are aggressively chasing low-cost smartphone sales, there is little room at the premium end thanks to Apple and Samsung.
Sales could drop even further if mobile chip shortages continue and the launch of the new iPhone, expected before Christmas, blights LG’s new handset release.