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LG closely watching Nokia's next move
LG Electronics, the world's No 4 handset maker, is closely watching rival Nokia amid talk the top-ranked mobile phone maker may cut its prices and re-enter the South Korean market later this year.
- Reuters
- Published: 00:06 May 27, 2008
Seoul: LG Electronics, the world's No 4 handset maker, is closely watching rival Nokia amid talk the top-ranked mobile phone maker may cut its prices and re-enter the South Korean market later this year.
Shares in LG Electronics tumbled more than eight per cent yesterday as investors gauged the impact of potential price cuts by Finland's Nokia. But an LG executive said the firm was generally positive about the industry this year.
"We are interested in the Korean market and investigating it, but we have not unveiled any products for that market," said Nokia spokesman Kari Tuutti, declining comment on future pricing.
LG shares ended down 3.8 per cent, while Samsung Electronics, the world's No 2 handset maker, closed down four per cent. The main Korean market fell 1.5 per cent.
"We are carefully watching Nokia," Chang Ma, LG's vice president for marketing strategy, said.
Analysts were split on the impact of a Nokia move.
"Nokia's handset price cuts, if they actually happen, will certainly not be applied universally to all its models," said Lee Sung-june, an analyst at SK Securities.
"Besides, Nokia and LG's handset strategies are different in that while Nokia is more about offering cheaper models, LG is more focused on technologically advanced models."
LG sold a record 24.4 million phones in January-March and looks set to beat its target of 100 million phones for the year.
First-quarter operating profit margin on handsets was 15.9 per cent on a parent basis, almost double the previous quarter's 8.3 per cent and against 6.6 per cent a year earlier.
In a separate interview, the head of LG's display division said the company's plasma business had suffered from lower than expected demand this year, but hopes to improve operating profits during the rest of the year.
"We are aiming to post better second-quarter operating profit... from the first quarter," said Simon Kang, responsible for LG's plasma business, which makes screens for LG's televisions and for external customers. "We also expect to post better operating profit in the second half from the first."
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