LG emphasis on cheap phones triggers loss

LG today warned that its mobile division swung hard towards a loss in the spring owing to its weakness in smartphones. It plunged from a roughly $620 million profit a year ago to a $101 million loss owing primarily to a lack of smartphones. The company shipped slightly more phones between April and June, 30.6 million, but it tacitly acknowledged that its focus on low-cost devices saw it in a declining market and with far lower profit margins.

CFO David Jung admitted that most of the Korean firm's hopes are placed on increasing the number of smartphones it makes this year. It only launched a few smartphones in the first half of the year and mostly targeted the budget and mid-range fields with phones like the Ally that weren't intended to compete with the top of the smartphone field. The iPhone in comparison saw a 61 percent jump in phone shipments last year and helped make Apple the most successful phone company by revenue, trumping even Nokia.

The Korean company is still one of the largest phone manufacturers in the world but has been routinely outgrown in relative pace by challengers like Apple, HTC and RIM that focus primarily or exclusively on smartphones. The category has been growing rapidly but was largely ignored by LG until late 2009. A deal with Microsoft cost LG dearly as it produced Windows Mobile devices at a time when the OS had fallen out of favor. It only rekindled interest when it moved to Android with the GW620 and has gained in relevancy mostly by adopting Google's platform.

Aside from Android, LG does plan to launch two Windows Phone 7 devices this fall, but they will represent just a tenth of the 20 LG smartphones due in 2010. [via BusinessWeek]

By Electronista Staff