Apparently LG Electronics hasn’t exactly been making a killing selling smartphones. The South Korean electronics company announced yesterday a $945 million USD rights issue – essentially a fund-raiser – meant to give its smartphone business the chance to turn itself around. LG’s mobile handset business has reported nearly 1 Trillion Korean won (roughly $900 million USD) in losses over the last six quarters.
Shareholders didn’t take too kindly to the news of LG’s forthcoming bake sale, as the company’s stock price dropped 14 percent Thursday. This marked the company’s biggest single-day loss in more than three years, and resulted in a whopping $1 billion drop in the company’s market cap. Shares in LG Electronics have dropped more than 40% overall this year.
LG continues to make both Android and Windows Phone handsets, but has been focusing more on Google’s platform in recent months. Sales of its Optimus line of high-end Android phones have paled in comparison to competitive devices from HTC and Samsung, both of whom LG trails in overall global Android market share. LG’s smartphone market share fell in the most recent reported quarter, and the company’s stock is routinely lumped in with Nokia and RIM as “one of the worst performers among global handset makers.”
Parent company LG Corp, who owns 35% of the electronics unit, saw its shares fall 10% on Thursday’s news. Corporate cousin LG Display, makers of flat-screen display panels, posted record quarter losses last month; its shares fell 6.3% Thursday.
Not exactly the best of times for LG, huh? Can they turn it around? Is Android the answer?