LG Electronics posts Q4 loss, hit by slow handset sales and price-fixing fine

LG's loss quadrupled compared to a year earlier, not helped by a €492-million fine by EU antitrust regulators

By Yewon Kang, IDG News Service |  IT Management

LG Electronics posted a fourth-quarter loss, hit by lower-than-expected phone sales and a European Union fine last month for fixing the price of CRT (cathode-ray tube) displays.

The world's second-largest TV maker reported a net loss of 468 billion won ($429 million) for the quarter ended Dec. 31, compared to a loss of 112 billion won a year earlier.

Revenue fell 2% year on year, to 13.5 trillion won, while operating profit rose 24% to 107 billion won in the quarter, from 86 billion a year earlier.

A ¬491,567,000 ($650 million) fine imposed by E.U. antitrust regulators dragged down LG's results.

Alongside six other international electronics makers, LG was fined for fixing the price of CRTs made for TVs and PC monitors from 1996 to 2006. The South Korean company is "mulling over" the idea of appealing the case, said Ken Hong, the LG spokesman in Seoul, but it has not done so yet.

Other companies who joined the price fixing include Samsung SDI, Chunghwa and Philips. Panasonic, Toshiba, MTPD (now a Panasonic subsidiary) and Technicolor (formerly Thomson) were only fined for taking part in a cartel for TV tubes.

In the fourth quarter, LG had strong sales of flat-panel TVs, selling 9.3 million units in the fourth quarter, but high marketing costs cut into its operating margin.

Starting last September, LG attempted a come-back in the smartphone market with its flagship 4G LTE smartphone, the Optimus G, first introduced in Korea. However, the company still lags far behind Samsung Electronics and Apple.

"We heard some good consumer feedback [on Optimus G] but the shipments weakened more than we previously expected," said a Nomura analyst in Seoul, blaming the poor sales on a weak component supply chain.

LG shipped 8.6 million smartphones in the quarter including the Optimus G, which was released to 50 markets worldwide this month. With a new Optimus G Pro expected in April, analysts expect the company to reach 10 million smartphone sales by the second quarter.

Local rival Samsung posted a record profit last Friday after selling 65 million smartphones in the fourth quarter.

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