Stop me if you’ve heard this before, but LG is having trouble selling smartphones.
This is the same story that we write about basically four times a year when its earnings are released. The company overall does well, but the mobile division continues to tread water.
LG’s mobile division did see an increase of about 6.8-percent, in smartphone sales from the previous quarter. But when it comes to the same period last year, it’s down 21.3-percent. That’s not a good look for LG, especially seeing as sales has continued to drop for many years at LG.
The company is putting the blame on the plateauing smartphone market, as well as the aggressive pricing from Chinese brands. LG likely means Huawei, Xiaomi and OPPO. Which have some pretty incredible value smartphones on the market.
The mobile division reported an operating loss of $268.4 million USD in the quarter. Part of this operating loss was due to LG relocating its smartphone production to Vietnam. Once it is finished relocating, it should be able to drop prices on its smartphones, as it will cost less to manufacture them.
LG expects that things will improve in Q3. Citing that there is “growing demand” for 5G smartphones. Currently, it only has the LG V50 ThinQ 5G available, but the way that this was worded, and stating they will be introducing “competitive mass-tier smartphones”, it sounds like we may see some more affordable 5G smartphones from LG this fall. Possible some mid-rangers, similar to the Moto Z4.
Quarter after quarter, LG has posted an operating loss for its mobile division, and usually posts a drop in smartphone shipments. That’s happened again here. If this sounds familiar, that’s because you’ve heard of HTC. A company who isn’t even announcing any new phones really – no wonder sales are dropping. HTC was once the biggest Android smartphone maker, until they became stagnant and refused to step up its game. All while keeping their prices very high.
The difference for LG is, that they were never the biggest Android smartphone maker. They were usually in the top five, but never the biggest. The company sells more mid-range and low-end smartphones through prepaid carriers like Boost Mobile and Virgin Mobile, than they do flagships. Which have a much smaller profit margin. However, the other thing that’s different with LG, is the fact that it has other businesses that are keeping its mobile division afloat.
LG’s home entertainment division continues to put up record numbers. Mostly due to the fact that it is one of the only companies that has affordable OLED TVs in its lineup – Samsung is not even selling OLED TVs, only QLED. However, once that starts to stagnate, the mobile division could be in trouble. LG has made changes at the mobile division, bringing in a new head of the division, changing up when and how it announces and releases smartphones. But so far, it doesn’t seem to have really made much of an impact.
LG is due to release a new smartphone pretty soon, likely the V60 ThinQ. It normally releases a phone in the Spring and another in the Fall, around IFA. Which is in less than a month. Hopefully that is one that consumers will get behind.