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October 24, 2012

LG Finds Footing in Tumultuous Mobile Market

By Rory Lidstone, TMCnet Contributing Writer

LG Electronics (News - Alert), like many of its competitors, has struggled with the mobile market since smartphones became the norm worldwide. While Apple's iPhone sells by the millions, neck and neck with Samsung's (News - Alert) Galaxy line of Android devices, most other manufacturers have been struggling to get by, posting slim profits.

However, LG's luck may be turning around if its third-quarter numbers are any indication. The Korean manufacturer reported a net profit of $142 million for the period, while it had posted an overall loss for the same period last year.

In terms of smartphones, the company's shipments for Q3 2012 increased 59 percent compared to Q3 2011, and 23 percent over the previous quarter. The company's mobile business itself posted a third-quarter profit of $18.6 million – much better than the loss posted in the previous quarter.

All in all, LG shipped seven million phones in the period between July and September – a record for the company, fuelling overall profit. While this number is still dwarfed by the 58 million smartphones sold by Samsung during this period, smartphones now account for half of LG's total handset shipments and more than 70 percent of mobile revenue.

"Today's results show that it doesn't have to be Apple (News - Alert) or Samsung to make profits in smartphones," said Hong Sung-ho, an analyst at I'm Investment & Securities. "LG won't be able to earn double digit profit margin in handsets as Apple and Samsung do. Still, LG proved it has the potential to stand out among its second-tier peers of Huawei, ZTE (News - Alert), Motorola, etc., with its manufacturing competitiveness."

While LG's Optimus line of handsets may be doing well right now, the company can likely expect further mobile success as Google's (News - Alert) next Nexus phone, apparently set to be unveiled at the end of the month, is to be manufactured by LG.

Google typically produces one Nexus phone per year, each of which receives the latest Android updates before other handsets while sporting Android completely unaltered by manufacturers.

Edited by Braden Becker
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