LG mulling phone partnerships
LG Electronics Inc is engaged in talks with various parties on possible partnerships, the head of LG’s mobile business said, as the world’s No.3 handset maker seeks to turn around its struggling handset operation.
The South Korean firm, however, remains committed to its mobile business and does not have any plan to ditch the loss-making operation, Park Jong-seok, chief executive of LG’s mobile communications business, told Reuters.
“We are always talking to other businesses and companies (on alliances and deals). We’re looking into almost every alliance that the mobile industry can think of,” Park said in an interview.
“Some of the talks are quite active…but one thing that does not change is that LG is very committed to the mobile business… Our recent rights offering was mainly aimed at investing in handsets, and that proves it.”
LG recently made a near $1 billion cash call mainly to prop up its floundering handset business after the operation reported a loss of nearly the same amount over the last six consecutive quarters.
Its slow pace of recovery prompted talk that LG may have to restructure the business amid a series of alliances in the sector. Google agreed last year to buy Motorola Mobility for $12.5 billion and Nokia also dropped its software to make phones using Microsoft’s platform.
Park said the loss-making handset maker saw results improving “a lot” in the fourth quarter thanks to solid sales of its Optimus LTE model, which went on sale in early October.
“Earnings will get better this year, as we plan to raise premium phones, mainly LTE models, to more than half of our smartphone lineup.”
LG, which has failed to introduce compelling models to challenge Apple and Samsung Electronics, has sold more than 500,000 Optimus LTE phones so far and sales are likely to top 1 million by the end of January, Park said.
The model with a 4.5-inch display runs on Google’s Android platform and is LG’s most popular smartphone. LG is seeking to revive its fortunes by mustering strength in 4th-generation Long Term Evolution (LTE) mobile technology as mobile operators upgrade their networks to increase 4G services.
LTE is the fastest-growing segment of the wireless business in terms of global subscriber growth, with worldwide subscribers jumping to 11.6 million last year from just 300,000 a year ago and set to grow more than five-fold this year, according to research firm IHS iSuppli.
LG has said it has some 23 percent of key LTE patents, worth nearly $8 billion.
Park said it had long been working on a new LTE smartphone with a large 5-inch screen that could also work as a tablet, which will be launched soon.
Samsung, the world’s biggest smartphone maker, unveiled a similar-sized phone late last year that has received good reviews.
“LG downsized its handset business last year, focusing on profitability. I expect LG’s handset business to stage a turnaround from the fourth quarter of last year, driven by rising shipments of smartphones, especially higher-margin LTE phones,” Greh Noh, an analyst at HMC Investment Securities, said.
Shares in LG Electronics rose 1.45 per cent in the wider market that was up 1.03 per cent on Thursday.
LG Electronics shares underperformed the market last year, down 35 per cent compared with the market’s 11 per cent fall.