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LG Electronics' third quarter hurt by handset competition

Despite selling 12 million smartphones, the mobile business of the South Korean company posts its first operating loss in five quarters.

Marketing costs hurt the profitability of LG's G2 smartphone.
Josh Miller/CNET

LG Electronics announced Thursday that its third-quarter net income slid 34 percent due to price cuts and marketing costs associated with the launch of its latest flagship handset .

The South Korean electronics maker reported net income of 108.5 billion won ($103 million) for the three-month period ended September 30, compared with 156 billion won ($147.7 million) for the year-ago period.

Even though the company reported selling 12 million smartphones for the quarter, the company's mobile communications business slipped into the red for the first time in five months, recording an operating loss of 79.7 billion won ($75.5 million) on sales of 3.05 billion won ($288.8 million).

The company had hoped to get a boost from its 5.2-inch G2 smartphone, which was launched in August. But its profitability was hurt by higher marketing costs promoting the handset and increased competition from Samsung and Apple, which forced it to cut prices.

Meanwhile, the company's home-entertainment division had an operating profit of 124.4 billion won ($117.8 million) in the third quarter on declining global TV demand.

Overall, the company recorded quarterly sales of 13.9 trillion won ($12.5 billion), a 5 percent increase over the year-ago period but an 8.8 percent decline over the previous quarter. Operating profit increased 27 percent to 217.8 billion won ($196.34 million).