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LG Electronics Suffers Inflated Deficit in Smartphone Business in Q3
Worsened Performance
LG Electronics Suffers Inflated Deficit in Smartphone Business in Q3
  • By Michael Herh
  • October 10, 2017, 12:00
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LG’s mobile division posted a deficit for the 10th consecutive quarter.
LG’s mobile division posted a deficit for the 10th consecutive quarter.

 

LG Electronics' third-quarter deficit in the mobile phone business expanded from the previous quarter. Therefore, the company’s mobile division posted a deficit for the 10th consecutive quarter. Their cell phone models are expected to remain a hub for connecting the internet of things (IoT).

On October 10, LG Electronics announced that the company provisionally recorded sales of 15.27 trillion won (US$13 billion) and operating profit of 516.1 billion won (US$464 million) in the third quarter of this year. Sales and operating profit swelled 15.2% and 82.2% year on year, respectively. Although its overall performances were not bad, its Mobile Communications (MC) division is estimated to have chalked up a deficit between 200 billion won (U$180 million) to 250 billion won (US$225 million).

LG Electronics’ smartphone business posted a loss of 200 million won (US$180,000) in operating loss in the first quarter of this year and 132.4 billion won (US$119 million) in operating loss in the second quarter the second quarter. Stock market analysts believe that marketing cost for the launch of the premium smartphone “V30” in the third quarter and sluggish mobile phones sales expanded its operating loss. Average selling prices (ASPs) of its mobile phones also declined due to a lack of shipments.

The V30 which was released on September 21 is having an uphill battle with Samsung’s Galaxy Note 8. Despite its superior quality and design, LG’s new smartphone model is said to have achieved sales of less than 50,000 units, losing a brand power battle to the Galaxy Note 8. The V30 sold an average of 10,000 units a day immediately after its release but currently shows sales of less than 5,000 units a day.