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April 25, 2012

LG Posts Profit for Q1 Due to Smartphones and TVs

By Rory Lidstone, TMCnet Contributing Writer

It looks like LG Electronics (News - Alert) Inc. is back on the rise after three quarterly losses in a row. The South Korean electronics giant reported Wednesday that its net profit for the first quarter of 2012 is 243 billion won ($215 million). While not as impressive as Korean competitor Samsung (News - Alert) Electronics which has been posting massive earnings for the last year and expects to break its own record in earnings again this quarter, LG's earnings are a big step up from the 15.8 billion won loss posted for the 2011 fiscal year.



Curiously, LG's overall sales fell seven percent from 2011 to 12.2 trillion won but its increased smartphone sales and demand for high-end televisions in Korea resulted in increased earnings. This is lucky for LG since Sony and Sharp (News - Alert) just posted huge losses for the same quarter, citing poor TV sales. When compared to the same period in 2011, LG's operating profit more than tripled to 448 billion won — much higher than the market consensus of 395 billion won.

Possibly even more surprising than its TV sales are LG's smartphone sales which have sharply increased this quarter over the 101 billion loss posted for last year. LG posted 35.2 billion won operating profit for its mobile communications business, which includes smartphones — a huge improvement over the six consecutive quarters of loss posted for this division. It would appear that LG's Optimus series of phones are taking hold in the competitive smartphone market — no small feat considering the massive popularity of Samsung's Galaxy series of smartphones and of course Apple's iPhone (News - Alert).

LG's TV-making department's operating profit doubled from a year earlier, despite the lack of demand in the majority of developed countries, most notably Europe. It seems, however, that South Korea's demand for premium 3D TVs is strong right now — a situation that only LG and Samsung are really able to take advantage of.






Edited by Jennifer Russell
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