LG’s new approach pays off: Handset shipments, and outlook, strong

LG Electronics Inc. shipped 23.7 million handsets in the fourth quarter, up nearly 40% year-on-year, based on its expanded feature phone offerings, the company said.
LG’s handset revenue for the year-end quarter grew to about $3 billion, 12% above the year-ago quarter. For 2007, operating profit in its handset business was up twelve-fold over 2006, which had been an unremarkable year for that business.
LG is an industrial conglomerate with four major divisions: digital appliances, digital displays, digital media and mobile communications. The bulk of the company’s mobile communications business is powered by handset manufacturing. The conglomerate’s overall business also did well, which it attributed to strength in handsets and in liquid-crystal displays.
In December 2006, the conglomerate and its handset division shuffled dozens of executives in order to resuscitate its various businesses, particularly handsets, where it had lost market share and seen flagging profit margins.
LG attributed much of its revenue growth to successful handset sales in the United States with its Voyager and Venus handsets and in Western Europe, where its Viewty sold briskly. It also saw a strong increase in the uptake of its 3G phones, sequentially, the company said.
The company’s outlook included channel and unit growth in emerging markets, where it faces intense competition from leader Nokia Corp. LG forecast its 2008 shipments would rise to 100 million units, which would represent 25% growth, year-on-year. Other estimates, from handset companies and analysts, are about half that rate.
LG, the last of the five, top-tier vendors to report fourth-quarter earnings, garnered 7.1% of global marketshare for the quarter, two points behind Sony Ericsson Mobile Communications, its next closest rival, Strategy Analytics said. Nokia, at 40%, has obtained market share greater than its three closest rivals combined.
Total industry shipments for 2007 were 1.15 billion, a jump of nearly 16% over 2006, according to data from ABI Research. ABI, however, reduced its forecast for annual growth this year from 13.5% to 12%, due to macro-economic factors. Nokia, which just claimed 40% global market share, had forecast 10% this morning as it reported record shipments and earnings for last year.