LG Posts Q1 Loss, Predicts Growth

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LG Electronics is forecasting that a continued weak global economy will reduce industrywide sales of mobile phone handsets to approximately 260 million units worldwide in the current quarter, down more than 10 percent from the same period last year, the world's third-largest handset manufacturer said Tuesday.

LG, nevertheless, is predicting that its own sales will grow more than 10 percent quarter-to-quarter in the current three-month period as the vendor focuses on higher-tier products such as the Arena and its messaging phones, such as the Xenon and Neon models.

LG Electronics Tuesday reported a $141 million loss in its first quarter ended March 31, despite a nearly 15 percent increase in sales year-over-year to $9.12 billion compared to the same period a year ago.

The Seoul, Korea-based company blamed the loss on the global recession, but noted that handset profit margins and improvements in its flat-screen business helped its bottom line. LG said handset sales accounted for $2.78 billion of its revenue, up 22.6 percent year-over year.

The company attributed the handset revenue gains to popular midtier models, such as the vendor's Cookie and the LG-KS360. However, unit shipments of handsets fell 7 percent year-over-year and 12 percent quarter-over-quarter to 22.6 million units. LG blamed the declines on a seasonal effect and the global economic contraction.

Still, LG is targeting over 10 percent growth quarter-over-quarter by focusing on high-tier products such as Arena, and messaging phones Xenon and Neon.

"I see a better picture for the second quarter as mobile phones are set to grab more share, TV sales are in good shape on lower prices, and as home appliances enter a busy season," KTB Asset Management Co. analyst Lee Jin Woo told Reuters. "We're seeing some signs of improvement in consumer sentiment, which makes me a little bit more positive on the demand-side boost."

LG's Business Solutions company reported a sales decline of 6.6 percent year-over-year to $780 million. The company said the loss was due to a sales decline in monitors and other products. To improve sales, LG said it would focus on new B2B channels for such products as network monitors.

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