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Weak G4 Sales Leads To Lower Profits Forecast For LG

June 23, 2015 - Written By Kishalaya Kundu

LG’s latest flagship smartphone apparently isn’t selling as well as the company would have hoped for, leading analysts to cut forecasts for the company’s quarterly profits. Multiple investment firms have already cut earnings estimates for the Mobile Communications Division of the South Korean electronics major, and three more investment firms have now joined the growing list of analysts to have adjusted the company’s earnings estimates downwards for Q1, FY 2016. According to a report carried by Business Korea, Daishin Securities almost slashed their previous estimates by half, from 102 billion Won ($92.3 million) to only 56 billiion Won ($50 million). Another securities firm, NH Investment & Securities, also lowered its forecast significantly from 95 billion Won (US$86 million) to 64 billion Won (US$58 million). Yet another company called Korea Investments and Securities also cut back on its forecast of quarterly profits for LG’s mobile division from 115 billion won (US$104 million) to 68 billion won (US$61 million).

As a comparison, LG’s Mobile Communications Division had declared an operating profit of 86 billion Won (US$78 million) in the corresponding quarter last year, and 73 billion Won (US$66 million) in the quarter ended March, 2015. While LG believed they could sell 12 million LG G4s globally, analysts always believed that would be a tall order. They however expected the company to better the G3’s disappointing sales of 5.8 million last year. In order for the G4 to outshine its predecessor, LG needed to have shifted around 2.6 million of its flagships every quarter. Going by current reports however, that seems unlikely as shipments to retailers, carriers and sales partners haven’t crossed 2.5 million as yet. Actual sales to end-users are likely even lower. What’s making the situation worse is that the company is having to spend more money on marketing to better compete with rivals Apple and Samsung, who continue to remain at the top of the smartphone pile.

LG had launched its latest flagship, the LG G4 in late April this year, as a replacement for the last generation flagship, the G3. The phone comes with a 5.5-inch curved Quad HD display, and is powered by Qualcomm’s Snapdragon 808 SoC with a hexa-core CPU and an Adreno 418 GPU. The device comes with 3 GB RAM and 32 GB internal storage. The smartphone sports a 16 megapixel rear camera with Optical Image Stabilization (OIS), Laser Auto-Focus and an f/1.8 aperture. The device also sports an 8 megapixel front camera. The battery is rated at 3,000 mAh and connectivity options include WI-FI 802.11 a/b/g/n/ac, Bluetooth 4.0, NFC and Cat.6 LTE. The LG G4 comes with Android 5.1 Lollipop out of the box with LG’s proprietary Optimus UX 4.0 on top.