Seoul: LG Electronics Inc, the world's No.3 handset maker, on Monday launched a new smartphone that runs on South Korea's fast, fourth-generation network, in the company's latest attempt to rescue its loss-making handset business. The Optimus LTE will square off against Samsung Electronics Co's 4G version of its flagship Galaxy S model and Apple's new iPhone, which runs on standard 3G network, during the key year-end holiday season.
The high-end model comes after LG suffered five consecutive quarterly losses from handset sales and is set to report a wider loss for the September quarter later this month due to a lack of attractive high-end models. LG has been slower than its bigger rivals to refocus on smartphones, and its smaller scale has held it back from profiting from rising demand for cheaper phones. The firm now hopes its early move to the 4G segment can help revive its fortunes.
"Optimus LTE is our ambitious product that mobilizes our LTE and display technologies," Na Young-bae, senior vice president and head of LG's domestic marketing, told reporters. The model, with a 4.5-inch high-definition screen, has an 8-megapixel rear camera and 1.3-megapixel front-facing camera. It is powered by Qualcomm Inc's 1.5 GHz dual core processing chip and Google's gingerbread version of the Android operating system. Its hardware offering is similar to Samsung's Galaxy S II LTE.
"With this product alone, LG won't be able to dramatically improve earnings, but it showed LG has narrowed the gap with Samsung in terms of both hardware and software capability, and it does have capacity to make compelling products," said Woo Chang-hee, an analyst at LIG Investment & Securities. "Its telecom business will gradually show improvement with higher shipments and reduced costs and will be able to swing into profit next year." LG said it has yet to decide when the product will go on sale in overseas markets. It has some 1,400 LTE patents, which some analysts estimate are worth $8 billion.
LG is expected to report that loss margins from handset sales worsened in the third quarter to around 3 per cent from 1.7 per cent loss margin in the second quarter, due to reduced volume shipments after it trimmed feature phone lineups to focus on smartphones. In July, the company cut this year's smartphone sales target by 20 per cent to 24 million units and gave no outlook for when the business may become profitable.
Many analysts have forecast the business to turn profitable next year, but confidence levels have waned after the consecutive string of quarterly losses. LG shares rose 3 per cent on Monday, beating a 0.7 per cent rise in the broader market.
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