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LG's latest financials explain its shift in mobile strategy

Is this the moment LG stops trying to keep up with Samsung?
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Earlier this month, LG said that it would row back on its smartphone ambitions by abandoning an annual cycle of smartphone launches. Rather than releasing a flagship just because Samsung did, LG would only pump out a handset when it felt that it should. The report speculated that the move was in anticipation of more bad news for LG Mobile when its fourth-quarter financials were published. Now that the figures are out, it's clear that LG's patience for the division has worn thin, since it managed to lose $204.8 million in just three months.

Weirdly, such a loss actually looks pretty good on LG's balance sheets, simply because LG Mobile lost even more -- $331 million -- in the previous quarter. The company could also point to a 9 percent bump in sales thanks to the V30 and the popular Pixel 2XL, which LG builds for Google. On the downside, the company cites the usual rocky market, increased component costs and tough competition. And the plan to recover from that, beyond abandoning regular premium phone launches, is to focus more on mass-market devices.

Which brings us to the G7 itself, which we were expecting to see pop out at MWC at the end of February. According to the Korea Herald, LG executive Jo Seong-jin ordered a dramatic redesign of the handset earlier this month. Apparently, designers were told to stop what they were doing and "review the new product from scratch," so it's likely it won't appear for several months. The delay may help LG's bank balance, however, since there's speculation LG spends money it can't afford on marketing new flagships.

Beyond mobile, however, LG's a well-oiled, profit-making machine, making decent profits in home appliances and big money in home entertainment. The company claims that its slightly lackluster appliance profits were due to increased investment in its new Signature and ThinQ-branded products. TVs, meanwhile, were a big deal for the company thanks to increased sales in North America, Europe and Latin America. Overall, the Korean firm pulled in $344.7 million, which isn't bad for a company trying to keep a head above water while anchored to a loss-making mobile division.

LG's report also looks at the threats to its businesses in the future, including Chinese phone manufacturers and US trade protectionism. The latter is going to hurt LG pretty badly, since its popular (and Korean-made) washing machines are now subject to restrictive tariffs. The first 1.2 million imported into the US are subject to a 20 percent levy, while additional units will be subject to a 50 percent toll. It'll be very interesting to see how this affects LG's business in the next few months, especially as its phone division goes under a shift in strategy as well.

Update: LG has refuted the Korea Herald story claiming that the G7 has been postponed, pending a ground-up redesign. In a statement, a representative told Engadget that "Some stories have reported that LG's mobile division is delaying the release of the G7 in order to reevaluate its performance and design. This is inaccurate. Preparations for the launch of the G6's successor are on schedule."

The statement added that, "LG intends to focus on creating products that will result in meaningful results rather than launching new products on a schedule based solely on industry expectations and traditions. The release date for G7 is currently under consideration and will be announced when the time is right."

Source: LG (.PDF)
Coverage: The Overspill
In this article: 2017, business, gear, lg, LGG7, mobile, Q4, Q42017
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After training to be an intellectual property lawyer, Dan abandoned a promising career in financial services to sit at home and play with gadgets. He lives in Norwich, U.K., with his wife, his books and far too many opinions on British TV comedy. One day, if he's very, very lucky, he'll live out his dream to become the executive producer of Doctor Who before retiring to Radio 4.

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