Once a major name in smartphones, LG Mobile is now irrelevant — and still losing money

Published May 2, 2019

LG was once a stalwart of the smartphone industry — remember its collaboration with Facebook back in the day? — but today the company is swiftly descending into irrelevance.

The latest proof is LG’s Q1 financials, released this week, which show that its mobile division grossed just KRW 1.51 trillion ($1.34 billion) in sales for the quarter. That’s down 30% year-on-year and the lowest income for LG Mobile for at least the last eight years. We searched back eight years to Q1 2011 — before that LG was hit and miss with releasing specific financial figures for its divisions.

To give an indication of its decline, LG shipped more than 15 million phones in Q4 2015 when its revenue was 3.78 trillion RKW, or $3.26 billion. That’s 2.5 times higher than this recent Q1 2019 period.

Regular readers will be aware that LG mobile is a loss-making division. That’s the reason its activities — and consequently sales — have scaled down in recent years. But the losses are still coming.

LG put Brian Kwon, who leads its lucrative Home Entertainment business, in charge of its mobile division last November and his task remains ongoing, it appears.

LG Mobile recorded a loss of 203.5 billion KRW ($181.05 million) for Q1 which it described as “narrowed.”

It is true that LG Mobile’s Q1 loss is lower than the 322.3 billion KRW ($289.8 million) loss it carded in the previous quarter, but it is wider than one year previous. Indeed, the mobile division lost 136.1 billion KRW ($126.85 million) in Q1 2018.

LG said Mr. Kwon is presiding over “a revised smartphone launch strategy,” which is why the numbers are changing so drastically. Going forward, it said that the launch of its G7 ThinQ flagship phone and a new upgrade center — first announced last year — are in the immediate pipeline, but it is hard to see how any of this will reverse the downward trend.

LG Mobile is increasingly problematic because the parent company is seeing success in other areas, but that’s being countered by a poor-performing smartphone business. Last quarter, mobile dragged LG to its first quarterly loss in two years, for example.

Just looking at the Q1 numbers, LG’s overall profit was 900.6 billion KRW ($801.25 million) thanks to its home appliance business ($647.3 million profit) and that home entertainment business, which had a profit of $308.27 million. Its automotive business — which is, among other things, focused on EVs — did bite into the profits, but that is at least a business that is going places.

LG Mobile’s losses continue but now sales are falling too

Published July 26, 2018

Korean electronics giant LG is soaring to new heights, but its mobile division continues to lag well behind the rest of the company and the signs aren’t promising.

LG’s latest financials released today recorded another quarter of success with operating profit jumping 16 percent year-on-year to hit KRW 771 billion ($715.1 million) as overall sales rose 3.2 percent across the group. LG said its sales and profit for the first half of 2018 are at all-time highs but — and you knew a but was coming… — its smartphone division remains a significant loss-maker.

The company’s mobile and communications division — which houses LG Mobile — posted yet another quarter in the red. Sales of KRW 2.07 trillion ($1.92 billion) represented an annual drop of 23 percent, while the division carded an operating loss of KRW 185.4 billion, or $171.95 million.

That’s compared to a quarterly profit of KRW 407 billion ($377.48 million) for LG’s home entertainment business and a KRW 457.2 billion ($424.04 million) profit for its home appliance unit, which are LG’s two stand-out business units.

There’s nothing new here, losses are commonplace for LG Mobile.

It hasn’t been break-even or profitable since 2014. Those losses have been cut by some degree since the company shook up the division with new leadership in November 2017, but there’s plenty to worry about with sales dipping noticeably over the past two quarters of business.

This time around in Q2, LG put its mobile losses down to “the slowing growth of the global smartphone market and a decline in mid- to low-end smartphone sales in Latin America.” While it claimed that the size of the operating loss was down to investments in sales and marketing ahead of the release of its next flagship devices.

There’s a hint a reorganization — perhaps even layoffs — as the company added that it would “seek to further improve its business structure” as it aims prepares to push its LG G7 ThinQ and LG V35 ThinQ devices worldwide and get ready for those new launches.

More changes are on their way, you’d imagine, as LG is surely looking for a way to stem the bleeding but also retain a mobile business has certainly been iconic despite its struggles in recent times. Perhaps the answer is a downsizing in a similar style to Sony in 2016. Back then, the Japanese firm was losing even more than LG is per quarter but it began to be more strategic with its new device launches and target sales markets. The end result of that strategy was an end to the big losses and a more sustainable mobile business.