LG swings to huge Q4 loss

Caroline Gabriel/Rethink Wireless
27 Jan 2011
Daily News

LG is hoping to emulate Samsung's smartphone turnaround in 2011, but an upsurge in shipments of its Optimus S model in the past few weeks came too late to save its fourth quarter results.

LG Electronics reported its biggest loss in two years, partly because of weaknesses in the mobile division, which suffered its third quarterly loss in a row.

This came in at 274.1 billion won ($246 million), as handset revenues fell by 15% year-on-year, while the whole group's net loss was 256.4 billion won ($230 million), reversing a year-ago profit of 361.9 billion won.

The handset unit accounts for about 20% of revenues but shipments were down 10% to 30.6 million units. Such trends have enabled RIM to usurp LG's number four position by revenue in the cellphone space, as the Korean firm sees its average selling price depressed by its reliance on low end devices.

A late start in smartphones, as well as falling television prices, are the chief headaches for new CEO Koo Bon-joon. But the firm was positive that the turning point is around the corner.

“Profitability will improve significantly in the first quarter…and we will be able to return to profit,” said CFO Jung Do-hyun on the analyst call. “Earnings from the handset division will also improve but are likely to remain in the red in the first quarter.”

In November, LG said the Optimus One became the company's first smartphone to sell more than one million units within 40 days of its launch, and the company plans to boost its capex and R&D spend in 2011, partly to accelerate its smartphone push.

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