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Is LG's revised mobile strategy actually working? Revenue and sales drop again
- LG’s mobile division has posted an operating loss of $171.95 million for Q2 2018.
- The mobile wing also recorded global sales of just $1.92 billion, its lowest total in over two years.
- Despite the dropping sales, LG as a wider company is still thriving thanks to its home appliance and home entertainment divisions.
It’s been just over six months since LG revealed plans to overhaul its mobile strategy in a bid to end its unenviable run of quarterly losses that stretches all the way back to 2016. Today, LG has posted its profit/loss margins and overall global sales for the second quarter of 2018 and it would seem that the company’s bold new strategy… hasn’t worked, and may have even made things worse.
LG’s mobile division has recorded an operating loss of $171.95 million for Q2 2018 — an increase from the $117.27 million loss posted in the same quarter in 2017. In a statement, LG blamed the loss on “contracting sales” and “increased marketing investments to support new flagship smartphone launches.”
The biggest worry, however, is the actual sales figure. The Seoul-based firm recorded sales of $1.92 billion for Q2, which represents an annual drop of 23 percent and the lowest quarterly sales total in well over two years (via TechCrunch).
LG points the blame at the “slowing growth of the global smartphone market” “and a decline in mid- to low-end smartphone sales in Latin America” for the dramatic drop in sales.
While LG’s reasoning isn’t without merit, investors may find it difficult to stomach two consecutive quarters of declining sales, especially when it’s once again laying the blame on the “revised smartphone launch strategy” for the division’s overall loss, as it did in Q1 2018.
Unfortunately for LG, it’s all well and good increasing your advertising spend, giving your branding a minor tweak, and shifting your release strategy, but if no one is actually buying the resulting products then you’re in trouble.
It’s worth noting that LG isn’t the only smartphone giant staring down the barrel of declining sales and buyer apathy, with Samsung also seeing a significant sales drop with its Galaxy S9 series. The key difference, of course, is that LG’s mobile division has been losing money for years now.
Despite LG’s mobile woes, the picture for the company as a whole is far less bleak.
The solution? For now, the company sees the LG G7 ThinQ and LG V35 ThinQ as its safest bets, but doesn’t sound too confident that the situation will change any time soon due to “competition in the premium smartphone category” and the prediction that growth will “remain stagnant in the second half [of 2018].”
Despite LG’s mobile woes, the picture for the company as a whole is far less bleak. The same official report notes that LG Electronics recorded operating profits of $715.1 million for Q2 2018, mostly due to the success of the company’s home appliance and home entertainment wings.
Do you think LG’s strategy has been a failure or is the market to blame? Let us know your thoughts in the comments.