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LG's Mobile division loses revenue on feature phones, but ships more smartphones

July 25, 2012

LG has released its Q2 results today, and the mobile division is not looking so good, losing 28.5% revenue compared to last year, which amounts to a $2 billion reduction. That seems like a huge loss, but there’s also a pretty good explanation for it, and things are not as bad as they seem for LG.

LG is seeing this sharp revenue loss in the mobile division mostly because of the transition from feature phones to smartphones, throughout the world. LG used to be a very big feature phone manufacturer, and although they’ve increased their smartphone shipments from 36% (of all units) to 44% Q0Q, they haven’t managed to take full advantage of this transition yet, and they are falling behind other manufacturers such as Samsung, HTC, and Huawei.

LG also had an operating loss of $50 million from last quarter, which they blame on marketing expenses for their new flagship devices such as the Optimus 4X HD. LG hopes to do better in the second half of 2012, when they’re going to push their LTE phones harder in the North American markets and other LTE specific markets.

Overall, the whole of LG was profitable, thanks to an increase in sales for their TV division, which also helped increase their profit by 46% year-over-year in Q2, up to $132 million, while operating profit doubled to $303 million. So LG is not out of the game yet, but they need to make a stronger push in smartphones and get out of Samsung’s shadow if they want to make a name for themselves in the market.