LG Q2 profit $138M, but sales fall 11% on mobile weakness

The mobile handset business saw sales fall more than 28 percent. The company continues to struggle as consumers ignore its mobile products.

Roger Cheng/CNET

LG still hasn't figured out its mobile business yet.

The Korean technology conglomerate posted a net profit of 159 billion Korean won, or $138 million, compared with a year-earlier profit of 109 billion Korean won, or $94 million. Revenue, however, fell 10.6 percent to 12.86 trillion Korean won, or $11.18 billion.

The biggest culprit was a 28.6 percent decline in sales for its mobile division, whose operating loss also widened a bit over a year ago. Despite a decline in sales in the home entertainment business, the company's profit in the area more than doubled.

LG continues to struggle with handsets and doesn't seem to have a quick fix out for its dilemma. It's one of several companies that continue to post losses and make little progress on global market share, alongside other stragglers such as Nokia, Research in Motion, and Google's own Motorola Mobility. Its results underscore the broader challenges facing the industry, which so far has only seen Apple and Samsung Electronics emerge as successful players.

LG attributed the decline to falling sales of its basic flip and messaging phones. Indeed, AT&T and Verizon both reported that a vast majority of phone purchases were for smartphones.

Despite the decline, the company said sales of its smartphones did improve. With higher demand for LTE devices, LG plans to focus its resources on more LTE smartphones. For the third quarter, LG said that while smartphone demand is expected to increase, competition will too. Beyond more phones, LG plans to spend more on its marketing effort and streamline its supply chain.

In the U.S., phones such as the LG Viper and LG Nitro HD have come on and gone without making much a dent in the consumer market.

LG did manage to double its operating profit in the home entertainment division thanks to higher sales of premium products, cost cuts, and a more efficient supply chain. It also saw stronger sales of its LED and 3D television sets.

The company expects demand for televisions to pick up in the second half.

LG's home appliance business did manage a small gain in sales as its operating profit nearly tripled. The company said it benefited from an improved mix of higher end products and lower costs.

Correction, 5:14 a.m. PT: This story originally misstated the dollar equivalent of LG's profits. The dollar conversion for the profit in the quarter just ended is $138 million, while the dollar conversion for the year-earlier profit is $94 million.

About the author

Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.

 

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