The Korea Herald

소아쌤

LG Electronics readies for comeback

By Korea Herald

Published : Nov. 20, 2011 - 20:25

    • Link copied

Models feature LG Electronics’ new smartphone “Optimus LTE,” which runs on a 4G communications network. (LG Electronics) Models feature LG Electronics’ new smartphone “Optimus LTE,” which runs on a 4G communications network. (LG Electronics)
LG Electronics, the world’s No. 3 handset maker, is striving to bounce back by the first half of next year with smartphones running on fourth-generation Long Term Evolution technology.

On Friday, shares of LG Electronics rose 1,600 won, or 2.44 percent, from the previous day to close at 67,200 won per share. The stock price had plunged to 61,600 won when the announcement came on Nov. 3 that the company would issue new shares for the first time in six years.

The main reason for issuing new shares was to fund investment in LG’s core businesses such as smartphones.

The company later announced through a public notice last Thursday that the new share issue would be scaled down to 980.4 billion won worth from the 1.06 trillion won announced on Nov. 3.

This meant the price of the 19 million shares to be issued on Jan. 9 decreased from an estimated 55,900 won per share to 51,600 won per share.

“When compared to other companies that recently made the decision to issue new shares, it’s hard to say that the scale of LG Electronics’ new shares is big,” said an analyst who wished to remain unidentified.

Kang Bong-woo, an analyst at LIG Investment and Securities, also said LG’s public announcement made about the newly issued shares has decreased the uncertainty and raised the group’s level of trust on its flagship unit.

“The move got rid of projects with uncertainties such as going ahead with new projects through mergers and acquisitions and supporting its affiliates like LG Display,” he said. “It could be interpreted as a way for LG Group to show its faith in LG Electronics by making preemptive investments.”

LG Electronics announced earlier this week that it had sold over 150,000 Optimus LTE smartphones.

With up to 130,000 LTE smartphones sold by its affiliate LG Uplus, more customers are subscribing for mobiles that run on the faster 4G LTE network as it was announced that LG Uplus will build a nationwide LTE network by the end of the year, said an LG Uplus official.

LG Electronics also plans on launching its Optimus Pad LTE tablet PC next month and its Prada K smartphone, operating on the Android 2.3 mobile platform, is expected to roll out in overseas markets early next year.

Noh Geun-chang, a senior analyst at HMC Securities, said LG is likely to make a turnaround in the first half of next year considering the company’s advantage in LTE smartphones and home appliances.

Another Seoul-based analyst said the market was ruling in favor of LG’s new LTE products and that the company may get back into the black by the fourth quarter of this year or the first quarter of next year at the earliest.

LG Electronics is also upping the ante on software, naming 14 software architects to start earlier this month.

“Gaining software competitiveness itself is a future growth engine,” said the company’s vice chairman Koo Bon-joon.

Software architects are a group picked from LG’s research and development departments to be seated in a separate team to experience various software-related tasks, being given additional yearly R&D funding.

The decision comes as a number of global IT firms, including LG’s biggest rival Samsung Electronics, is investing heavily to gain competitiveness in software, along with hardware.

Samsung recently recruited executives from Cisco Korea as well as former high-ranking workers of Apple and Sony, while global software giant Google acquired hardware device maker Motorola Mobility.

By Cho Ji-hyun (sharon@heraldcorp.com)