LG's handset unit narrows loss, expects more smartphone sales later this year

LG Electronics posted a narrower loss in its handset unit, and the company expressed hope that its transition to selling more smartphones will start to pay off later this year. However, the company continued to post weak overall handset sales figures.

On a company-wide basis, the South Korean electronics conglomerate posted an 87 percent decline in net profit, down to $103.4 million from $817 million in the year-ago period. Meanwhile, the company's mobile communications unit, of which handsets make up the vast majority of sales and operating income, posted a narrower net loss than expected and made strides compared to the first quarter.

LG's mobile communications unit posted an operating loss of $51.4 million, narrower than the $76.5 million loss forecasted by six analysts surveyed by Bloomberg. Handset sales clocked in at around $3.05 billion, up 12.2 percent from the first quarter, but down 5.1 percent from the year-ago period.

LG has been trying with minimal success to emulate the path of its larger South Korean rival Samsung, which began shifting to greater smartphone production last year. LG shipped 24.8 million total handsets in the quarter, up from 24.5 million in the first quarter but down from 30.6 million units in the year-ago quarter. Earlier this month, LG said it now expects to sell 24 million smartphones this year, down from a previous target of 30 million units; the company expects to sell 114 million handset units overall, well below its previous target of 150 million units.

Despite the lackluster unit volumes, LG said it is confident in its transition. The company said it is seeing growth in sales of its Optimus One and Optimus 2X devices in North America. LG said it expects increased handset sales for the third quarter due to new products and more smartphones. LG CFO  David Jung said at a briefing in Seoul that the company will continue to reduce its feature phone production as it shifts its focus to high-end smartphones even if that leads to a decline in overall unit shipments.

For more:
- see this release
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article
- see this Bloomberg article

Special Report: Wireless in the second quarter of 2011

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