LG handset sales shrink, Mot surprises

Dylan Bushell-Embling & Robert Clark
telecomasia.net
LG Electronics swung back to profit in the first quarter, despite the best efforts of its handset business to drag the firm down with falling sales and profit margins that remain below 1%
 
The company reported net profit of 675 billion won ($603.45 million), with consolidated sales of 13.7 trillion won.
 
But handset unit LG Mobile Communications saw its revenue fall 19.4%, with sales dropping 19.7% to 27.1 million units.
 
Operating profit margin on handsets sold grew to 0.9% in the quarter, down from 6.4% a year earlier but a slight improvement on the 0.2% margins from 4Q09
 
The decrease in margins was largely due to investment and marketing expenses, LG said.
 
Analysts quoted by Dow Jones Newswires believe that LG's margins aren't recovering fast enough for it to meet its target of improving them to 7% this year.
 
But some also expect LG's Android phone, which launched late last year, to help turn its fortunes around.
 
IT unit LG Business Solutions grew sales 15.4% to 1.3 trillion won on the back of increased demand.
 
Meanwhile, Motorola made a surprise $69 million profit, with encouraging signs from its struggling devices unit. 
 
 
The unit made an operating loss of $192 million, with sales down 9% over a year ago, but it shipped 2.3 million smartphones, mostly Android-based. It launched six new Android phones during the quarter.
 
Motorola’s stock on NYSE rose 3.47% on the news, slipping back 0.56% to finish at $7.12.

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