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Modular dud drags LG to first loss in six years

Don’t panic. LG is betting on …. electric cars and Android smartwatches

You’re an investor in LG: do you want the bad news or the even worse news?

The bad news is that the under-par performance of LG’s mobile business caused the giant chaebol to post its first loss in six years. The worse news? Executives, to reverse LG’s fortunes, are betting on er, Android smartwatches and um, a Chevy electric car.

“Profitability was hampered by weak sales of the G5 smartphone and higher marketing investments. Introductions of the next G Series phone and mass-tier devices in the second quarter following Mobile World Congress are expected to help greatly improve the LG Mobile Communications Company’s market position in 2017.”

Good luck with that.

LG lost $223.9m on income of $2.51bn in its Q4 2016 period (pdf). It explicitly blamed its “modular” flagship, the LG G5. LG’s white goods and entertainment electronics and car components did well, but despite posting 15 per cent higher sales year on year, smartphones didn’t keep pace with the market.

In a break with tradition, LG didn’t disclose how many smartphones it had sold, but claimed the V20 model had done well. That’s the audiophile-friendly phone Europeans can’t buy. LG declined to capitalise on Samsung’s Note 7 woes and the device is only available here on import.

The modular G5 contained an expansion slot, a clever differentiator allowing compatible “Friends” to slot inside. The G5 launched with just two, a DAC and an imaging module - but the overall design was lacklustre, we found. By last summer, LG was already lowering expectations.

TKFKALG* is pinning its hopes on American car design. It has announced a partnership with Chevrolet to produce an all-electric version of the Bolt, a car that claims to have a 383km (238 miles) range on a charge.

And despite a bloodbath in the smartwatch market, LG is fiercely ploughing on. It's expected to launch new Android Wear 2.0 models in a couple of weeks. ®


The Company Formerly Known As Lucky Goldstar

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