Wednesday, 25 January 2017

LG Mobile Faceplants - Posts Dismal Q4 Results


You'd almost think releasing an incendiary smartphone was a good business move. LG, handed a massive opportunity to drive its mobile business forward by Samsung's Note 7 disaster just posted its Q4 results, and it's hard to see how they could be any worse.

Mobile sales were down by 21% year on year, whilst losses grew by more than 650%. On their own a pretty dismal state of affairs, in concert with Samsung's earnings report yesterday it must be painful for the company's management.

Performance was so bad that the whole LG group was dragged into loss by the mobile division.

The modular G5 is being blamed for the awful performance, but I suspect the problem is more likely to be that the LG name has absolutely zero retail presence in smartphones. Which probably didn't matter when most of its phones had the Nexus brand to draw buyers in.

Without Google's direct support LG finds itself in a bad place. Across 2016 the mobile division managed to lose over $1bn. There's nothing in the pipeline that suggests a new LG device, not the V20 nor the G6, will do anything to change that performance.

LG has two options. Slim down operations and focus on selling fewer, more profitable phones (doing a Sony) or buy out a brand with more recognition and build on that. Given that it already owns WebOS, maybe a Palm buyout could be negotiated with TCL which, having just taken on Blackberry, might be happy to sell off its older orphan.

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