LG's handset sales slip in Q1, but recovery predicted for second half

LG Electronics slumped to a loss in the first quarter, still weighed down by weakness in its handset business. However, the company predicted the unit will return to profitability in the second half of this year.

Click here for details on LG's first quarter mobile business

Click here for key stats for LG's mobile business in the first quarter.

The South Korean conglomerate, which is the world's No. 3 handset company by volume, reported a net loss of $14.6 million on a company-wide basis--down sharply from a profit of $623.3 million in the year-ago quarter. LG's sales remained flat at around $12.2 billion.

In LG's mobile communications business, which is dominated by its handset unit, the company reported an operating loss of $93.3 million, better than the operating loss of $245 million it reported in the fourth quarter of 2010 but still down from the operating profit of $26.8 million LG posted in the first quarter of 2010. LG said handset sales were down 14.3 percent in the quarter, largely due to seasonality. LG shipped 24.5 million handsets in the quarter, down 10 percent from 27.1 million in the year-ago period and down 20 percent from 30.6 million in the fourth quarter of 2010.

Despite the tepid sales, LG expects its handset business to improve in the second quarter, driven by sales of the Optimus 2X and Optimus Black. "The profit from the handset business will improve in the second quarter from the first quarter, and given the upcoming strategic product offerings from the current quarter, we expect the unit to return to the black in the second half of the year," LG CFO David Jung said on the company's earnings conference call, according to the Wall Street Journal.

LG said it expects around 20 percent of its total handset sales this year to be smartphones as part of a larger push to boost overall handset sales by 30 percent. The company plans to release more new models and cut unprofitable ones, and is banking on devices such as the Optimus 3D and LTE-capable Revolution at Verizon Wireless (NYSE:VZ) to spark growth. 

For more:
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

Special Report: FierceWireless Q1 earnings page

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