LG Electronics, the world’s no.3 handset firm, has posted a 90% plunge in operating profit as it struggles to find a winning smartphone.
Losses from mobile phones in the second quarter totaled 120 billion won ($101m) in the second quarter, compared with profit of 620 billion won a year earlier, Bloomberg reported.
The handset business’s loss is the biggest since the company started tracking the division’s financials in 2002 and is three times the average estimate of analysts surveyed by Bloomberg.
Net profit fell 33% to 856 billion won ($722m) from a year ago as operating profit dived 126 billion, which the company attributed to its higher R&D and marketing spending.
Handset shipments in the quarter rose 2% to 30.6 million units, but sales fell 31% to 3.4 trillion won.
LG has just 1% of the global smartphone market. It says nearly a third of its handset R&D team is working towards a smart device that can compete with the iPhone or Samsung’s new Galaxy S range, FT.com reported.
Im Jeong Jae, a fund manager at Shinhan BNP Paribas Asset Management, told Bloomberg the company needed to regain investors’ confidence in its mobile phone business, but added that “the environment doesn’t seem too bright.”