LG Mobile Struggles, Looks to Android for Turnaround

LG Electronics warned that profits at its struggling handset division would be slow to recover, as it retools its business to introduce Android-based devices in a fast-growing, high-end smartphone segment, including new models for Verizon.

The South Korean company, which has seen its “problematic” mobile phone business suffer since the middle of last year, said turning around its embattled unit was a “top priority.” It plans to release its Android phones for Verizon later this month, with more models hitting store shelves in the third quarter.

“We may need more time to see improvement in our handset profitability,” said David Jung, LG’s Chief Financial Officer. “However, we will continue to launch smartphones that will compete well in developed markets and will try to regain our market presence in this segment.”

Despite posting a $608 million profit for the January-March period, mostly due to gains in its appliance and TV divisions, the electronics giant has been losing momentum in its handset group since the third quarter of last year.

LG has depended largely on cheaper phones to drive profits, highlighted when its business plunged sharply despite a 20 percent surge in shipments.

In the coming quarter, executives say they expect fortunes to improve, as the company pushes forward with new Android-based smartphones, which started to roll out in Europe late last year. However, analysts say LG will need at least one or two more quarters to recover.

Underscoring the shift in consumer demand, smartphone sales jumped 50 percent in the last quarter, according to Strategy Analytics, a research firm. By comparison, the overall market, which includes regular handsets, rose 22 percent in the same period.

Meanwhile, Apple nearly doubled its profit on “staggering” sales of iPhones, from strong international sales in China and Asia Pacific, gobbling up market share from rivals such as BlackBerry maker Research in Motion.


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