Smartphone failure costs LG CEO his job
New chief to focus on making Optimus One a 10m-seller
Published: 20 September, 2010
READ MORE: People/Management | LG Electronics | Handset
LG may have put a brave face on its slow start in smartphones, setting ambitious targets recently for its revamped Optimus line, but the firm clearly feels the problem runs more deeply and has replaced its CEO. Hard on the heels of a similar move from Nokia, also ascribed mainly to smartphone problems, LG said CEO Nam Young had resigned and would be replaced by Koo Bon Joon - brother of the family run giant's chairman Koo Bon Moo.
Leaving aside the dubious track record of corporations appointing family members, LG clearly wants to make a strong statement of intent as it tries to emulate compatriot Samsung. Samsung also made little impact on the smartphone sector with its initial Android launch, but has caught up dramatically this summer with its global launch of Galaxy S, already a multimillion seller.
LG has set the same target - and a total objective of shifting 10m smartphones this year - for its new Optimus models, which launch later this month with over 100 carriers. However, it remains somewhat overshadowed by its larger rival, and is also coming to market at a time when Nokia is unleashing its new generation and HTC is readying new models. With the new CEO, is trying to boost confidence and the change was very specifically linked by spokespeople for the company - which has a wide variety of businesses - to the smartphone business.
The official statement said Nam Young had resigned because of the "current difficult situation" and analyst Im Jeong Jae of BNP Paribas Asset Management told Bloomberg: "Investors seem to view this appointment as the company's will to pull itself together to come up with a better business strategy for mobile phones. Nam's resignation was inevitable given that LG has lagged behind in spotting the popularity of smartphones, relegating it to a second tier name."
The new chief has an uncertain track record in handsets - though the same could be said for Nokia's new CEO - but there will be a handover period. Koo Bon Joon will take office next month, but Nam will retain the CEO title until March next year. LG stock rise 4.7% on the news, its largest gain since March. The stock has lost a third of its value since peaking in May 2008. Weakness in high end handsets was blamed for a 90% drop in operating profit in the second quarter, when LG had less than 1.5% of the smartphone market, despite having more than 10% of the total cellphone sector.
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