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LG today announced results for Q1 2016. The company as a whole made a respectable profit of $420 million, which was a huge jump of 65% year-over-year. This was on revenue of $11 billion.
So, who’s bringing in all that bread? We can tell you right away who isn’t — LG’s Mobile division. That unit lost nearly $170 million this quarter. In their own words, it’s the LG G5’s fault:
LG Mobile Communications Company reported sales of KRW 2.96 trillion (USD 2.46 billion), a decline of 15.5 percent from the first quarter last year. Shipments of 13.5 million smartphones were 12 percent lower both year-on-year and quarter-on-quarter, mainly as a result of the business entering the slow season as well as declining shipments of existing flagship models due to high interest in the recently announced LG G5. Competition in the smartphone market will continue to increase, leading to further price erosion which LG plans to counter with a strong global push for the modular LG G5 smartphone and new mass-tier models such as its X series.
It’s a neat way to tie a bow on a disappointing quarter, but the company is going to need more than goodwill faith to convince investors that the mobile division will soon return to profitability. Samsung, HTC and all the other smartphone vendors won’t make it easy on LG.
They’re all doing some of their best work this year, and with a heavy push from the growing Chinese market it won’t be easy for LG to return to solid form. That said, LG does have a fine phone in the LG G5, so all they need to do now is convince folks that it’s worth buying.
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