LG Electronics posted strong company-wide results in the third quarter, partially driven by increased handset shipments. However, the company's profit margins suffered. Further, LG reported a decline in cell phone shipments in North America and South Korea.
On a company-wide basis, LG reported a net profit of $695.2 million, way up from the $21.4 million it posted in the year-ago quarter. Handset sales totalled $3.53 billion, up nearly 25 percent from the year-ago quarter.
LG said it shipped 31.6 million handsets in the quarter, up 37 percent from the year-ago quarter, and up 6 percent from the 29.82 million it shipped in the second quarter. However, LG's handset profit margin fell to 8.8 percent, down from 11.5 percent in the third quarter last year and down from 11 percent in the second quarter. The company said falling prices for phones--and its reliance on low-end handsets--contributed to the margin drop. LG did not disclose the average selling price of its phones.
In detailing its handset results, LG said that unit shipments to North America declined because of a rising demand for smartphones and prepaid phones, another sign that the middle of the handset market is being squeezed. LG said it expects shipments in the fourth quarter to be higher than the third quarter, and that it would expand investment in both smartphones and emerging markets. The company plans to introduce its first Android phone and three new Windows Mobile phones in the fourth quarter.
- see FierceWireless' Q3 earnings page
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
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