LG’s handset division has now made money for two quarters in a row

lg1

LG’s handset division lost money for six consecutive quarters until Q4 2011 when it made roughly $8.8 million. Now that the company’s Q1 2012 financial results are out, we’re pleased to say that they’ve made money once again, about $30.7 million. Those numbers are incredibly tiny, but they’re better than nothing. How about revenues though, what are those figures like? Year on year, we’re looking at a drop of 14%. Quarter on quarter, that drop is a softer 9%, which is expected since the fourth quarter is considered a holiday quarter. How can the company improve? Well, it’s not an easy answer. The handset division has margins that barely break 1%. On the low-end, they’re being attacked by ZTE and Huawei, who make Android smartphones that are much cheaper than what anyone else can offer. On the high-end, they’re being outflanked by Samsung and Apple, who together take home over 90% of the mobile industry’s profits.

Will LG be around in a year or two? It’s an uncomfortable question, but it’s one we should be asking. What exactly do they do that’s considered innovative? The Optimus 4X HD, the “world’s first quad core smarpthone”, hasn’t even started shipping. The Optimus Vu, the gigantic device with a 5 inch 4:3 aspect ratio screen, is clearly a clone of the Samsung Galaxy Note. And as for LG’s other handsets, some of them sure are pretty, but again, the Chinese are making phones with the exact same specs for far cheaper.

Nokia’s in the exact same boat. Apple and Samsung are killing them in the high end. ZTE and Huawei and all the no-name Chinese vendors are killing them in the low end. And just yesterday we filed a report that said Nokia might go bust in as little as 18 months.

Watch this space, hopefully Q2 2012 will be better. By then Samsung will have the Galaxy S III out on the market and Apple will have shown off iOS 6, so … maybe not.

[Via: Reuters, Engadget]

  • Anonymous

    Of course LG will still be around because it makes so many things but it’s fair to ask how successful its smartphone division will be moving forward. It said all the right things when I spoke with them at their HQ but knowing the right path and doing it are two different things. 

    http://www.intomobile.com/2012/04/17/lg-says-its-now-ready-smartphone-battle/

    • http://www.intomobile.com/ Stefan Constantinescu

      You’re absolutely right. I should have said: “Will LG still be in the mobile phone business in a year or two?”

      LG will never go bankrupt because of all their other business units, but I wouldn’t be shocked, at all, for them to throw their hands up in the air and announce that they’re going to divest the handset business.

      • Ken

        Divesting the handset business is not in the stars for LG. The business will be profitable long-term and it will be competitive and that’s not just wishful thinking. Chinese competitors are a concern but Korean companies played that same role when entering the North American and European markets 20 some years ago so we have some experience in this area (unlike some companies).

        We’ll see 12 months from now who’s right.

Back to top ▴