LG’s mobile biz to turn around

A model tries LG Electronics’ Quick Voice service. The software enables users to control their smartphones using speech. The software, currently only supported on the Korean version of the Optimus LTE2 and Optimus Vu, is to be preloaded on more models in the near future. (Photo : LG Electronics)

LG Electronics fell behind in the smartphone era but seems to have finally rebounded. The latest data clearly shows that the flagship firm of LG Group is catching up fast.

Despite earlier negative forecasts amid sluggish handset sales, its operating profit for the April-June period increased by 120.5 percent to 349 billion won ($302.95 million) from a year ago.

Its revenue declined by 10.6 percent year-on-year but net profits increased by 46 percent to 159 billion won ($138 million).

The better-than-expected outcome is mainly attributed to a robust performance in television and home appliance sales. Earnings from the home appliance division rose 181.6 percent to record 165 billion won ($143.23 million) during the period.

The company, led by Chief Executive Koo Bon-joon, expects an even better performance in the third quarter, powered by a recovery in its handset business. LG Electronics Chief Financial Officer (CFO) Jung Do-hyun said its handset business will swing into the black in the second half helped by the rising demand for LG’s advanced Optimus-branded smartphones in both developed and emerging markets.

So far over 4 million Optimus smartphones supporting long-term evolution (LTE) have been sold since last year. “The second half will be the biggest turning point for LG’s mobile business. And we are ready to roll out upgraded models. I’m not bluffing,’’ Jung said.

Another reason for the CFO’s positive outlook is Qualcomm’s full support in providing its new Snapdragon S4 quad-core chips.

LG confirmed it will release high-end LTE Optimus smartphones using Qualcomm’s new S4 Pro mobile application (AP) chips. They will apply a finer 28-nanometer processing technology and based on the quad-core technology, combine LTE and 3G telecommunication functions into one.

“LG has completed talks with Qualcomm to receive the new chips at a first-tier status. Our upcoming Optimus phones will also use picture quality-enhanced screens provided by LG Display,’’ said Jung. LG was previously the first company to introduce a dual-core phone.

“Our upcoming quad-core LTE phones to be released between the third and fourth quarter are the result of a closer and deeper partnership with LG Electronics and LG Group’s other affiliates. From display quality, battery life-span and camera functions, the much-awaited smartphones should be our best,’’ Jung said, adding the handsets will be shipped to the North American market.

The company expects to sell over 7 million smartphones in the third quarter, a sharp increase from the second.

Park Kang-ho, an analyst from Daishin Securities, claims the portion of smartphones will reach 50 percent of total shipments in the third quarter, which will help secure stable revenue.

Strengthened marketing

Based on the improvements of its two important earning pillars of televisions and smartphones, LG Electronics plans to spend more on marketing and promotional campaigns.

“Our utmost focus on research and development (R&D) in products over the last two years has begun paying off. Now we will be more aggressive in promotional campaigns,’’ said Jung.

Company spokesman Jerry Kim said LG’s new personal assistance service Quick Voice will be released for English-speaking countries early next year.

He said the Quick Voice software is a good example of LG’s vigorous R&D capabilities. The software will be available on upcoming Optimus devices.

Amid these recovery signals, the CFO denied speculation that the group’s component-making affiliate LG Innotek and display-producing unit LG Display will seek to raise capital.

The consumer electronics giant said that it will expand its product lineup in key emerging markets such as India and Russia and China to offset losses caused by falling demand in developed ones.

“The ongoing debt crisis in Europe is hurting us. But we will do our best to sell more mobile handsets in Japan and North American markets. At the same time, LG plans to put more focus on selling design-focused and budget phones in emerging markets,’’ the CFO said.

“One good sign is consumer spending in China seems to be rising. It will help us ship more of our home appliances such as refrigerators and washers.’’ <The Korea Times/Kim Yoo-chul>

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