LG forecasts tough sledding in third quarter
July 21 2008 - 1:55 pm ET | Phil Carson | RCR Wireless News
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LG Electronics Co. Ltd. said today that it expected handset shipments to emerging markets to slow and competition to intensify in developed markets in the current, third quarter, as it posted positive results for the quarter just past.
Revenue in the industrial conglomerate’s handset business rose 39% from the year-ago quarter to $3.7 billion, which was more than one-third of the parent company’s revenue in the second quarter. The division posted an operating profit of $531 million, up nearly 12% over the year-ago quarter.
LG shipped 27.7 million handsets, with North America — its largest market region — accounting for 34% of its global markets, up 45% over the year-ago quarter and a 14% rise sequentially.
The company said it would allocate more marketing resources to push its premium handset models to sustain double-digit profitability.
The company’s shipments in the second quarter were sufficient to maintain its No. 4 position in global rankings ahead of Sony Ericsson Mobile Communications, which shipped 24.4 million units in the second quarter, but said it would cut 2,000 jobs to address profitability.
A big question to be settled by the end of this month: Were LG’s handset shipments sufficient to displace Motorola Inc. from the No. 3 ranking? Motorola shipped 27.4 million handsets in the first quarter and reports second-quarter results on July 31.
LG has projected full-year shipments will reach 100 million units, which would be slightly less than 10% market share.
LG said its second-quarter performance was based on sales of premium handsets such as its Secret, Viewty and Venus.
