Wednesday, January 24, 2007

LG takes a $176 Million Haircut on Televisions over Christmas

TWICE: LG Blames Flat-Panel TV For 85% Q4 Profit Decline
Seoul, South Korea — LG Electronics reported that its fourth-quarter net profit was down 85 percent due to price declines for flat-screen TVs.
LG’s profit was $51.2 million for the fourth quarter that ended Dec. 31 vs. a profit of $228 million during the previous year’s fourth quarter. Sales were down 11 percent to $5.87 billion from the previous year’s fourth quarter of $6.51 billion.
In digital display, sales decreased 29 percent vs. the third quarter due to “intensifying price erosion and year-end inventory control.” Operating profit was down for the category during the quarter due to lower plasma sales and flat-panel price declines.

I don't think it's fair to blame the TV's for LG's misfortune. A more truthful headline would read:

LG Blames Retail Bloodbath and Insecure Marketing For 85% Q4 Profit Decline.

So not only did they sacrifice profitability to vie for a shot at being top of the heap, they're planning to do it agian this year:

For 2007, in digital display LG said it is looking for rapid expansion of 40-inch market, expected to be led by fast growth in LCD and price erosion to intensify due to fierce competition among competitors. LG plans to increase its flat-panel market share by reinforcing Full HD included in its product lineup and “expanding channel coverage,” the company said.

Some people never learn.

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1 comment:

Anonymous said...

Your favourite "you can't make this stuff up" seems to apply here, too. A firm so eager to exsanguinate itself seems just about as peculiar as "terror-free" gasoline.