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G2 marketing, TV losses take bite out of LG Q3 profit

updated 11:46 am EDT, Thu October 24, 2013

LG sees profit fall on TV competition, G2 marketing

South Korea's LG Electronics posted consolidated revenues of $12.51 billion for the third quarter of 2013, grabbing $196.34 million in profit off that total. LG, the third-largest smartphone manufacturer in the world, saw its mobile division continue to grow, but the firm's television division continued to struggle in the face of mounting competition and lower demand. This quarter's profits were the lowest the company has seen over the course of 2013.

LG's mobile business grew, selling 12 million devices over the quarter for $2.75 billion in revenue. The division saw a loss for the quarter of $75.3 million, due in large part to an "increase in marketing expense" for its G2 smartphone. Additionally, LG has seen growing competition in the smartphone segment as others have lowered prices and rolled out other devices.

LG is thought to have spent roughly $188 million on marketing in the third quarter.

In both its mobile and display arms, LG has to worry about two large factors: its rival Samsung and cheaper Chinese competitors. Samsung competes with LG for smartphone and television sales across the spectrum of consumers. On the low-end, Chinese manufacturers are making devices for much cheaper than LG can typically do. The company's solution appears to be a focus on the high end while seeing what it can accomplish in the middle range.

"LG plans to focus on increasing sales of new premium products such as the LG G2 smartphone during the peak holiday season as well as maximizing 3G and mid-tier mass devices such as the L II Series and F Series," LG said.

LG is not abandoning the low-end market, though. The company just yesterday launched the entry-level LG Fireweb in Brazil. That device runs Mozilla's Firefox OS, which is designed to run as fast as Android on cheaper, lower-power hardware, with the aim of appealing to developing markets. LG has also recently shown off the LG Flex, a smartphone with a curved OLED screen. That device is not thought to be bound for developing markets.

LG's television segment saw a seven percent drop in revenue for the quarter, with the LCD display division posting $4.5 billion in revenue. Sales in developing markets have picked up, but LG's press release pointed to a softening market in Europe and other areas, as well as lower prices pushing down revenues. LG warns investors that they should expect a year-on-year sales decrease for LCD TVs.

by MacNN Staff





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