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(Yonhap Feature) LG's smartphone turnaround hinges on G6

2017/03/24 09:00

By Kim Deok-hyun

SEOUL, March 24 (Yonhap) -- Sliding through a photo gallery of LG Electronics Inc.'s new G6 smartphone, Park Yong-ho, an employee in his 30s at a mobile-phone store in Seoul, shows off what he calls the most vivid images taken by a smartphone.

"Can you believe it? These photos look like they were taken by a DSLR camera," Park said, adding that the device's full-size screen enables users to take and review photos simultaneously.

Asked how many G6 smartphones he sold these days, Park declined to comment.

Park said, however, that expectations were high for sales of the new phone, about 10 days after LG began selling them in South Korea.

Featuring a 5.7-inch screen and dual 13 mega-pixel standard and wide-angle cameras, the G6 is the latest effort by LG to help turn around its money-losing smartphone business.

A poor performance in the mobile phone unit was a major drag on LG's earnings for last year.

LG's mobile phone division reported an operating loss of 467 billion won (US$416.4 million) for the fourth-quarter of last year, marking the seventh consecutive quarterly loss.

For all of 2016, LG's mobile phone unit posted an operating loss of 1.26 trillion won, hit by poor sales of its G5 and V20 flagship smartphones.

LG's market status at both premium and entry-level smartphone sectors has been hurt by fierce competition with Chinese vendors.

The launch of the G6 came as Samsung Electronics Co. is still reeling from the global recall of the Galaxy Note 7 phablet, which was scraped last October over fire concerns.

LG said the G6, with an 18:9 screen aspect ratio, is the first smartphone that supports both Dolby Vision and HDR technologies, which offer a wider range of color and luminosity, wherein both the darkest and the brightest areas become more vivid.

Industry data had suggested that LG sold about 30,000 G6 smartphones in just two days of its launch on March 10 in South Korea, but the initial consumer response might have been weaker than expected.

In an indication of how many G6 phones have been sold since March 10, the number of people who switched their mobile-phone service to another wireless carrier stood at 18,252 on March 10, according to data by the Korea Telecommunications Operators Association.

In South Korea, people typically buy a new smartphone with promotions under a two-year contract by switching service providers without changing their phone numbers.

The number of the so-called "number portability" cases rose to 20,214 on March 11 and 23,292 on March 13.

A rise in the number portability cases means that more people want to buy a newly-launched smartphone.

The number, however, fell to 11,321 on March 14, 12,951 on March 15 and 10,993 on March 16, compared with an average daily number of 13,715 during March 1-9.

In comparison, when Samsung Electronics began selling the Galaxy Note 7 on Aug. 19 last year, a total of 35,558 people switched service operators.

Attention now turns to next week, when Samsung unveils the Galaxy S8, with some analysts questioning whether the G6 could gain the upper hand against the S8.

Still, it is too early to say whether the G6 would help LG turn around its loss-inducing smartphone operation.

Investors and analysts have already predicted that LG's mobile phone division may substantially reduce its operating loss in the first-quarter of this year.

Shares of LG Electronics hit a 52-week high this week and broke the 70,000 won-level for the first time in two years and six months.

Kim Dong-won, an analyst at KB Securities, expected LG's entire businesses to posted an operating profit of 781.1 billion won in the first quarter, up 55 percent on year.

"An operating loss at LG's smartphone business is expected to be substantially reduced, thanks to robust sales of the G6," Kim said in a research note.

Song Eun-jeong, an analyst at HI Investment & Securities, also agreed that LG's mobile phone unit could perform better than expected in the January-March period.

He expected LG's mobile phone division to post an operating loss of 44 billion won in the first three months of this year, compared with a previous market consensus that it may post an operating loss of 120 billion won.

LG plans to begin selling the G6 in the U.S. and other overseas markets next month, that can further boost sales.

Park Gang-ho, an analyst at Daishin Securities, predicted that LG's accumulated sales of the G6 may stand at 400,000 units in the first quarter and 1.7 million units in the April-June period.

(END)

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