LG smartphone sales continue to struggle, $68.4 million loss reported

by: Matthew BensonOctober 29, 2015
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Due to declining smartphone sales, LG Electronics is reporting a disappointing Q3 2015. Earlier today the Korean conglomerate issued its earnings report, which saw overall net income decline by 48% YoY to 83.7 billion won ($73.7 million). FactSec, a financial analytic company, had originally projected LG would boast 146.5 billion won ($129.1 million) in earnings. Total sales were down 5% to 14 trillion won ($12.3 billion) with operating profit falling 37 percent to 294 billion won ($259.1 million).

The sour results have a clear culprit, with mobile sales seeing a 77.6 billion won ($68.4 million) decrease despite shipping 15 million smartphones during this period. Sales of said devices were not attributed to high end models, with the OEM having a wide selection of affordable low and mid range offerings. The company remained optimistic that Q4 will prove more profitable thanks to sales from both the V10 flagship and the new Nexus 5X hardware.

The positive news to be found was the fact, for the first time in three quarters, LG’s TV business made a profit. In the end, over 80% of total Q3 profit was generated by the company’s home appliance division, responsible for washing machines and refrigerators. Overall, LG earned $109 million in profit, but it certainly was not its mobile efforts that it had to thank for that.

 

LG V10 Hands On-25

Analysis

LG had arguably been anticipating these poor earnings given the fact it held an emergency meeting several weeks ago to discuss cross-company patent sharing. Shortly thereafter, The Korea Times published a story that LG Display will soon take control of OLED lighting-related development from current owner LG Chem. This past summer as well, LG Display invested $1 billion in flexible OLED development,  in a report that claims it got a sizable investment from an “unknown” American company, widely believed to be Microsoft.

The new “must haves”

While both the V10 and Nexus 5X  have received solid reviews, the former has already seen a poor sales start in its home market. Several overseas carriers will soon be offering the V10, however given its high price point and limited spec-superiority over the significantly reduced G4, it may have a tough road ahead.

Despite the very vocal outcry of support for LG’s commitment to support expandable storage via microSD as well as user-replaceable batteries, the sales aren’t speaking for themselves. While the V10 has some interesting features such as relatively high durability, an integrated fingerprint sensor, and a second screen ticker, it’s releasing dangerously close to a major hardware refresh expected to start in Q1 2016.

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The Nexus 5X meanwhile, continues to be readily available while the Huawei-produced 6P is sold out in multiple markets. This could have a net-positive effect with customers eager to get new hardware going for LG, and/or it could be an indication that the supply shortages with prior year’s LG Nexus devices have been ironed out. At the same time, the phenomenon might be a result of a clear preference for the 6P and/or a sense that the 5X fails to bring enough spec-value for the money, especially considering international pricing.

 Are you surprised to see LG struggling with its mobile division? Can its most recent efforts help turn things around?

  • D13H4RD2L1V3

    (Posted this in another Android news website. I think you might like this.)

    I think this is due to several factors.

    It’s the combination of tougher competition (especially from Samsung), the rise of cheaper unlocked devices that offer the performance and specs of $600+ devices without the price and the fact that the G4, as brilliant as it is, really isn’t much different from the G3. My friends who have the LG G3 said that they liked the G4 but wouldn’t upgrade because the changes were too minimal to justify it.

    The LG V10 is very compelling, but really, what LG should do is continue to make excellent phones but try not to be too incremental about them. Also, they should see if they can put their devices at a lower price-point to boost sales and make them more attractive. One more thing is that LG should improve their marketing efforts. Samsung’s decision to seal up their batteries and remove the expandable storage option this year is a good opportunity for LG to heavily capitalize on the fact that their 2015 phones have both. But there wasn’t much effort done in that, nor in the entire marketing department. The marketing part is crucial, because my friends still think that LG “has disappeared from the face of the earth” as far as their phones are concerned.

    I know some folks are inevitably gonna compare LG to HTC or Sony, but the truth is, HTC and Sony have been struggling for years. Both continue to make a loss and their future is uncertain. While LG can somehow be compared to Sony in the sense that they have other divisions to help the entire company make money should their smartphone division falter, HTC does not have anything to fall back to if their smartphone division falters.

    Another thing is that LG could consider doing it like Samsung and add a separate brand to their phones.

    Like how Samsung calls their Android-powered phones “GALAXY” and how Sony calls them “XPERIA”? LG did try with “OPTIMUS” back then, but I think they should really try again as “LG” isn’t really a strong force in terms of branding in the smartphone market.

    Also, they should consider making LG UX lighter. I mean, I have no issue with LG UX on my G4, but it does look ugly and frankly, making it lighter is gonna bring lots of benefits anyway.

    • Dani T.

      You know you can make it look however you like right?(im talking about the UX)

  • saksham

    i think its because of lack of advertisements for the mobile division… u see a lot of lg home appliances ads.
    here in India i hardly see anyone with an lg phone its all Samsung , apple and Sony

  • Daggett Beaver

    There are probably a dozen reasons why LG isn’t selling well, but from my personal perspective only, it’s the lack of an AMOLED display. I came really close to buying a G3 instead of a Note 4, but it was the display that made the difference. Now that I have a Note 4, I’m sold on other aspects of the phone, like the S Pen. But my original decision was all about the display. I don’t know if that’s a big deal for everyone, though. Display has always been my #1 priority. The V10 looks fabulous to me, though.

    • NamelessStar

      it was the same for my wife, she was between the g4 and s6 edge. What won her over the the less cold like feel of the amoled screen vs the ips lcd screen on the g4. Myself having felt both at the same time it just felt awkward and i like the amoled feel better.

    • ASYOUTHIA

      I’m glad they don’t use AMOLED displays. They look too …cartoony to me

  • droidtomtom

    I think they should aim more at the mid tier market. I’m coming from a Galaxy S3 and after looking over every phone available within my $300 cap I purchased a used LG G3 from Swappa for $190.

    Although the One Plus X has me wondering if I pulled the trigger too soon. If the V10 was a smaller 4.7″ to 5.0″ screen at $350 I would have definitely splurged. A minimum of 64GB of storage or 32GB and Micro-SD is a must for me. A swappable battery is not that important to me.

  • Opposum

    LG´s hardware choices are decent sometimes even great, but their UI and design is absolutely hideous. I mean look at that V10 , looks like a blackberry storm2 made out of plastic. The LG G4 took the crown off of the Galaxy S5 for being the cheapest ugliest looking flagship ever made. And it´s hard beating the S5 at ugliness, really hard. 99% of regular users buy a device based on its looks and hype. LG has none.
    Design aside, what´s there for a tech savvy user? their android skin is an absolute mess. The G3 was a disaster plus the awful screen, the Gflex was a disaster. Every flagship they release shines in one aspect and stinks in a bunch of others.
    G2 – a good phone, all around
    G3 – awful screen, disastrous optimization, decent cam
    G4 – great cam, hideous looks, sub par performance regarding every day use

    • D13H4RD2L1V3

      I have to agree that the G3 is quite a performance mess.

      For the G4, that depends. Carrier versions seem to have subpar performance while the H815 variant seems to be alright.

      As for looks, I guess it’s all down to personal preference.

  • Degus Jacoby Pradana

    Maybe LG hard fan should buy 4 – 5 LG phone at the same time so LG not struggling anymore.

  • After releasing that garbage called the G3, I can see why the sales…

  • Mozukortick

    reading comments on all android communities how sd card and removable batteries are super awesome, i expected lg to be n1 android phone maker — actually i didn’t expect, anybody with knowledge about current market, knows only a few care about them

  • Mo Bashir

    My brothers G3 sucks so bad. It heats up while its doing nothing. Starts to get laggy and kills the battery. One problem leads to another. My N5 still rocks though. But I credit google for that. LG still needs to learn to design and manufacture better phones than their G series.

  • S6EdgePlus IsBoss

    LG will always be Samsung’s dirty little slut at the bar on a Friday night at best.

    • squiddy20

      And so will you, judging by your over-the-top fanaticism with the company and their products.

  • Dani T.

    What LG should have done is make less crappy midrange and low end phones cuz i think thats where they lost a lot of money the G4
    – Adding a metal frame rather than plastic , a silicone back like on the V10(again rather than plastic) and front facing speakers would have made it the phone of the year hands down.Those are the only complaints about it i hear a lot of peaople complaing about LG UX as being 1.Ugly…how you can make it look however you want , you can uninstall any LG app that comes with the phone
    2.It has alot of usefull features like dual window and very nice clipboard(smart settings im not a big fan of..but againt easy to switch off)
    3.It runs very well(my last phone was an M7).
    On the Nexus 5X i dont think LG has a say in anything(i think google makes those decisions..but the current price theyr seling it is dead wrong).

    The V10 might be a big winner if they dont overprice it(I know a few people whos contracts expire and have set theyr eye out for it).
    PS.I bought the phone for the camera and becouse it was cheaper than the S6 , I did not expect to like it as much and i dont think i would trade it for any smartphone released this year.

  • diggie

    Maybe they should go back to making phones that fit peoples hands. I hope all >5″ phones fail and manufacturers react by making smaller phones.

  • Leonardo D Monkey

    Sad to see LG in this state , i kind of hated the back button thing, used a lg device for some time, but it just annoyed me. The worst is battery life on G3, G4 when it comes to video and browsing it’s inferior to all other flagships (sony,moto,apple,samsung) plus screen size i run way from 5.5 … their design need changes, sales show that, just go back to the drawing board…
    Liked the Nexus 5x but again mediocre battery life… their nexus devices always looked neat but with shitty batteries , just improve that i would gladly buy one.