LG Electronics is being pegged for a turnaround in mobile business this year thanks to a major restructuring of the mobile unit last year and its first-mover advantage, rolling out its flagship smartphone G6 early this year, according to local analysts.
LG’s mobile communications unit had a tough year as the G6’s predecessor G5 failed to excite consumers. The unit is expected to post around 1.2 trillion won ($1 billion) in operating losses for 2016.
Analysts predicted, however, LG could seize an opportunity this year by filling in the gap Samsung’s Note 7 left in the local market. It is slated to unveil G6 at the Mobile World Congress in February -- a month earlier than usual -- while Samsung is expected to delay the launch of its Galaxy S8 into April following the Note 7 fiasco.
LG’s restructuring effort is also expected to pay off this year. The firm cut around 30 percent of employees at its money-losing mobile communications unit throughout last year.
“The operating loss of the mobile communications unit would drop up to 1 trillion won this year thanks to the restructuring of the unit and solid sales of its premium smartphone G6 -- around 5.5 million units,” said Kim Dong-won, an analyst at KB Investment & Securities.
Lee Seung-woo, an analyst at IBK Investment & Securities said, “The deficit range in LG’s mobile unit would go down this year because of the reduction of fixed costs following restructuring, cost saving from streamlining products and improved platform efficiency.”
The upcoming smartphone G6 is expected to use a removable battery, ditching the non-removable battery adopted in the G5 model. It is also reported to adopt a mobile payment system, dubbed LG Pay, using the Magnetic Secure Transmission solution, which is similar to Samsung Pay. The MST solution allows for easy payment by touching a smartphone to magnetic card readers used in most retail stores.
By Shin Ji-hye (shinjh@heraldcorp.com)
LG’s mobile communications unit had a tough year as the G6’s predecessor G5 failed to excite consumers. The unit is expected to post around 1.2 trillion won ($1 billion) in operating losses for 2016.
Analysts predicted, however, LG could seize an opportunity this year by filling in the gap Samsung’s Note 7 left in the local market. It is slated to unveil G6 at the Mobile World Congress in February -- a month earlier than usual -- while Samsung is expected to delay the launch of its Galaxy S8 into April following the Note 7 fiasco.
LG’s restructuring effort is also expected to pay off this year. The firm cut around 30 percent of employees at its money-losing mobile communications unit throughout last year.
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| LG’s flagship smartphone G5 (LG Electronics) |
“The operating loss of the mobile communications unit would drop up to 1 trillion won this year thanks to the restructuring of the unit and solid sales of its premium smartphone G6 -- around 5.5 million units,” said Kim Dong-won, an analyst at KB Investment & Securities.
Lee Seung-woo, an analyst at IBK Investment & Securities said, “The deficit range in LG’s mobile unit would go down this year because of the reduction of fixed costs following restructuring, cost saving from streamlining products and improved platform efficiency.”
The upcoming smartphone G6 is expected to use a removable battery, ditching the non-removable battery adopted in the G5 model. It is also reported to adopt a mobile payment system, dubbed LG Pay, using the Magnetic Secure Transmission solution, which is similar to Samsung Pay. The MST solution allows for easy payment by touching a smartphone to magnetic card readers used in most retail stores.
By Shin Ji-hye (shinjh@heraldcorp.com)
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