Desperate to turn around its struggling handset division, South Korea-based LG Electronics Inc. announced Friday it will replace current CEO Nam Yong starting Oct. 1.
LG Group Chairman Koo Bon Moo's younger brother, Koo Bon Joon, 58, will replace Nam, who resigned after four years at the helm and in the wake of a sharp downturn in the handset division's performance. News that Koo was assuming command of the company sent shares soaring Friday.
LG is the third-largest mobile-phone maker in the world, trailing only Nokia and Samsung.
This is the latest high-level shakeup in the smartphone industry. Finland-based Nokia last week hired former Microsoft executive Stephen Elop to replace outgoing CEO Olli-Pekka Kallasvuo. Like LG, Nokia has struggled to compete in the smartphone market against Apple's iPhone and RIM's BlackBerry. (To add insult to injury, RIM on Thursday reported a 68 percent increase in its second-quarter profits and issued a bullish forecast for Q3.)
Bloomberg reports that shares of LG Electronics gained 4.7 percent in Seoul trading. According to Bloomberg, it was the biggest gain in nearly six months for LG, whose shares have fallen 16 percent in 2010.
LG's handset business lost 120 billion won in the second quarter, compared to a profit of 620 billion won in the year-ago quarter. Overall, LG Electronics reported a Q2 profit of 126 billion won, but that was a startling 90 percent drop from the previous year's Q2 profit of 1.24 trillion won. Clearly something had to change.