LG sees plunge in Q3 net profit as handset business falters

October 28, 2010 | 17:22

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LG Electronics said Thursday third-quarter net profit plunged 99 per cent year-on-year, due to growing losses in its handset business and weak US and European demand for consumer electronics.

The South Korean company, the world's third-largest handset maker after Nokia and Samsung Electronics, posted a net profit of 7.57 billion won ($6.7 million) in July-September, from 911.3 billion a year earlier.

It incurred an operating loss of 185.18 billion won compared to an 851 billion won profit a year earlier, while sales fell 2.1 per cent to 13.43 trillion won.

Analysts quoted by Dow Jones Newswires said they expect the operating losses to continue until the first quarter of next year.

They said the handset business was unlikely to improve any time soon given its high spending on marketing, research and development, amid a steep price decline in its cellphones.

Chief executive Nam Yong resigned in September after the firm's cellphone business stumbled following the rapid growth in popularity of smartphones.

He quit after LG's handset unit reported a 31 per cent fall in second-quarter sales and swung to its worst quarterly loss in eight years, as the company trailed Apple and Samsung Electronics in the smartphone market.

"Amid falling prices of mobile phones and increased investments to boost competitiveness in the smartphone business, profitability declined," the company said in a statement.

But it said the global introduction of its Optimus One smartphone and new Windows Phone 7 models are expected to "generate a positive response from consumers" in the coming months.

AFP

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