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LG’s phone business is still losing money

LG released its financial results for Q3 2017 and the news is grim for the mobile division. You'll be stunned when you see how much money it lost.

Published onOctober 26, 2017

Cell phones are one of the most popular consumer items in the world. It seems like everyone has one and no matter what the cost, they can all do some amazing things. Not only that, but people want to upgrade their devices often. It seems as though two years is the longest people are comfortable waiting and there’s also a rising trend of people who want to upgrade every year or even every month. Cell phones are so popular that they have spawned satellite industries like case manufacturers, repair shops, and online publications who write about them.

LG is one of the most popular manufacturers of cell phones in the world. They make other products like televisions, home appliances, and infotainment systems for vehicles, but many know them chiefly for making Android devices. We see its advertisements on TV all the time, carrier store employees routinely recommend its devices, and reviews almost always speak highly of them.

Apple reportedly partnering with LG Display for folding iPhone
So, why the hell can’t LG make any money selling phones? LG released its Q3 2017 financial results and the numbers are truly fascinating. As a company, LG had $13.44 billion in revenue in just July, August, and September, the three months that make up the third quarter. Its profits are up more than 15 percent on strong showings from its appliance and home entertainment divisions, but its mobile division lost $331.17 million.

LG had no choice but to put a positive spin on these numbers. It points out that revenues are up eight percent from a year ago and four percent over last quarter. That $331.17 million loss is actually a 13-percent improvement over the third quarter in 2016 and smartphone shipments were up 44 percent over the second quarter domestically and nine percent in North America.

Sure, all of those numbers are great, but they’re also incredibly telling about how LG is failing. LG shipped just 13.7 million units in Q3 2017, down from a high of 59 million devices in 2014. Due to that decline, LG has only shown quarterly profits twice over the last two calendar years. You have to reach back to Q1 2017 right after the LG G6 released for a profitable quarter, and then it only made a $3.2 million profit. Before, that you have to head back to Q1 2015 when the company was riding the wave of a strong 2014.

Related: Why the LG V30 has all the ingredients for success

It’s becoming increasingly clear that LG is being dominated in circles that it used to have a strong foothold in. The mid-range cell phone market has become very aggressive with companies releasing better and better phones at cheaper and cheaper prices. While LG does release phones aimed at the low and mid-range market, they’re hardly the first devices that people think of and face severe competition.

LG used to be a major player at the flagship level in the early days of Android. Samsung has pretty much taken over that market pushing aside not only LG, but companies like HTC, Motorola, and Sony too. LG will push its new V30 hard to attempt to regain market share and profitability. It’s already doing so by offering promotions and a lower price than its peers to entice customers to pick it up.

Where to buy the LG V30 (Update: V30 Plus coming to T-Mobile)
If you believe LG’s outlook, the future is rather bright for the mobile division. Even though it’s losing money, it is headed in the right direction. It also has some momentum and goodwill in the tech press since it has been widely praised for redesigning its phones in 2017 to look and feel more modern. Whether LG can use that momentum to turn around its mobile division is yet to be seen. We’ll be keeping our eye closely on LG because it still makes some great phones and is important to the overall Android ecosystem.

Do you think LG’s mobile division will survive? Are its phones compelling enough to help it rebound? Let us know down in the comments.

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