Securities companies are adjusting their Q2 profit estimates for the Mobile Communications (MC) Division of LG Electronics one after another, as the performance of the flagship handset G4 is likely to be lower than expected.
For instance, Daishin Securities and Korea Investment & Securities recently lowered their figures from 102 billion won (US$92.3 million) to 56 billion won (US$50.7 million), and from 115 billion won (US$104 million) to 68 billion won (US$61 million), respectively. NH Investment & Securities adjusted its estimate downward to 64 billion won (US$58 million) from 95 billion won (US$86 million), too.
The MC Division of LG Electronics had recorded 73 billion won (US$66 million) in operating profits in the first quarter of this year, and 86 billion won (US$78 million) in the second quarter of 2014.
Immediately after its debut, the G4 smartphone was predicted to record at least eight million units in sales volume this year, to surpass the record of the previous model G3, which reached 5.8 million units in the year of its release. In order to meet the goal, LG Electronics should sell 2.6 million G4s in the second, third, and fourth quarters of this year. However, the shipment for the second quarter is estimated to be less than 2.5 million units, and the actual sales volume is expected to be less than that.
Besides, LG Electronics has increased its marketing expenses to better compete with the iPhone 6 and the Galaxy S6, which could also affect operating profits.