LG Mobile loses whopping $380+ million in Q3, weak G5 sales mostly to blame
It’s pretty hard to contest Apple and especially Samsung had a poor July – September quarter showing as far as both sales and profits were concerned, but it’s important to remember these two are still market leaders and money-making machines.
The reason it’s disappointing to see one “only” post $46.85 billion gross revenues, while the other reports $4.5 billion operating margin is the crazy high standard typically required of them, based of course on their recent history.
At the same time, LG Electronics, which is another esteemed though clearly not as successful tech giant, would probably be happy to break even in the increasingly competitive mobile arena. Instead, “weak G5 sales” and “expenses associated with business improvement activities” saw the chaebol’s smartphone division yield its sixth consecutive quarterly loss, and the worst ever. Yes, ever.
Namely, Q3 2016 departmental expenses exceeded returns by no less than 436.4 billion won (roughly $385 million), with 2.52 trillion won in revenues, down 24 percent sequentially, and just 13.5 million unit shipments, representing a 9 percent year-on-year and 3 percent quarter-on-quarter decline.
Ironically, LG continues to raise its profile in the North American smartphone landscape, boosting regional shipments by 14 percent over Q2, while losing precious domestic ground (41 percent sequentially).
At the end of the day, strong home entertainment and home appliance sales were once again enough to offset mobile deficits, generating a modest overall $248 million profit. But is LG still going to tolerate that dynamic if the V20 follows the G5 on the flop train? For the sake of competition, let’s hope it doesn’t come to that.