The curse of the iPhone continues. A week after Nokia dispensed with its CEO, so has LG Electronics. Nam Young has resigned to make way for Koo Boon-joon, a member of LG's founding family and younger brother of LG Chairman Koo Bon-moo.
LG is the third largest mobile phone company, but profits have changed to steep losses over the past year. In Q2, LG's mobile phone division lost KRW120bn on sales of KRW3.3tn, with revenue falling 30.8 per cent year-on-year in Q2. The company blamed average selling price decline as the market was flooded with undistinguished touchscreen phones. Q3 results are imminent.
Strong growth in flat panel TVs and displays (it supplies components for the iPhone) have offset the fall in mobile profits, but mobiles makes up almost a third of the giant chaebol's income.
If you thought Nokia's performance has been lacklustre, remember that it still makes a profit from its mobile phones division. It was in a far worse position back in 1992 as a sprawling, unfocused and barely creditworthy conglomerate - a sort of Finnish chaebol - than it is today.
But like everyone else, it's seen RIM and Apple scoop up what profits there are to be made in the phone business, and without profit, there's no point being in the business. ®