LG seeks handset partners, but not a buyer
Head of mobile phone division claims the worst is over for the company's smartphone business
Published: 13 January, 2012
READ MORE: M&A | LG Electronics | Handset
Although LG made some well received handset launches in the holiday quarter and at CES, its smartphone business is still struggling to reach the big league. Despite making early moves into 3G displays and LTE, and replacing much of its senior management team last year, more radical action is still needed, say many analyst and some LG insiders.
The head of the struggling mobile phone unit denied revived rumors that LG would exit the market altogether, but conceded he was consnidering partnerships to ease the path. He will be particularly aware of how vital smartphones are proving to compatriot Samsung, in balancing decline in other electronics businesses such as TVs and chips, where LG also competes. Unlike Samsung, LG has so far failed to create a high end brand capable of hitting at the iPhone, and many of its sales have remained in the lower margin midrange, despite its roll-out of top end models at Verizon and some other carriers.
"We are always talking to other businesses and companies. We're looking into almost every alliance that the mobile industry can think of," Park Jong-seok, CEO of LG's mobile communications business, told Reuters. "Some of the talks are quite active ... but one thing that does not change is that LG is very committed to the mobile business."
He offered a recent rights issue as proof of LG's long term commitment to the handset sector, claiming the transaction's main purpose was to invest in mobile devices. That saw the firm raise almost $1bn.
The tide is turning, insists Park, with solid sales of the Optimus LTE during the holiday season. He said LG has sold more than 500,000 of these devices since launch in October and expects the figure to top one million by the end of January. Mobile World Congress next month should see new additions to the Optimus range, which started targeting affordable smartphones but has been shifting upmarket with the 4G and 3G models and should gain a tablet soon.
"Earnings will get better this year, as we plan to raise premium phones, mainly LTE models, to more than half of our smartphone line-up," Park said.
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