LG made only 1.2 cents in operating profit for each phone it shipped last quarter

LG made only 1.2 cents in operating profit for each phone it shipped last quarter
Selling smartphones has become a low margin business for LG, based on its latest earnings report. The company posted an operating profit for the second quarter of just $172,000 for its mobile business. During the three months, the company shipped 14.1 million units, a 3% decline from last year's second quarter figure.

But the most incredible number is the 1.2 cents in operating profit that LG made per phone shipped. LG blames the results on weak sales of premium phones. Smartphone and tablet sales showed strong growth in North America, but sales in its own backyard of South Korea were weak. LG can usually count on strong domestic sales of its high-end phones.

The company also is spending huge amounts of money to market its latest flagship model, the LG G4. But the device is having a tough time competing with other Android phones like the Samsung Galaxy S6 and Samsung Galaxy S6 edge.

The results drew a mocking tweet from Carl Pei, co-founder and CEO of OnePlus. Pei sarcastically congratulated LG for earning less per phone than OnePlus made during the quarter. OnePlus, of course, is known for selling highly spec'd flagship quality phones at a value price. On Monday, the company introduced its high-end OnePlus 2 with the 64GB model priced at $399.99.

source: ABC, @getpeid via BGR

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  • Battery 3000 mAh(18.5h talk time)



1. Ordinary

Posts: 2454; Member since: Apr 23, 2015

Lol at Carl Pei trying to mock LG with his "flagship killer". #SD810

2. wargreymon

Posts: 764; Member since: Nov 05, 2013

Where in the report does it say the mobile division earned 200m WON?

15. wargreymon

Posts: 764; Member since: Nov 05, 2013

Found it in the PDF on LGs website. One "bad" quarter isnt too shabby. Not like they lost money, just have to do better in the future.

3. jesus_sheep

Posts: 279; Member since: Apr 18, 2015

LG is a sinking ship.

11. HASHTAG unregistered

Maybe their phone division, but not LG as a whole.

41. LGisgood

Posts: 833; Member since: Jun 23, 2012

you are dreaming man. when you say LG its represents LG Electronics. not only the Smartphones. by the way LG smartphone is not sinking too its just did not meet the expection for this second quarter of 2015. and infact LG total number of sold phones/smartphones is increasing every year....and we are just on the 2nd quarter of the year there are two more quarters....3rd and 4th

4. Taters

Posts: 6474; Member since: Jan 28, 2013

Eh. All smartphone margins are super low. Which makes it more aggregious that Apple gets away with the largest profit margins in any industry ever, not just mobile. What is possible an even bigger crime is that they get praised for having Greta customer service and warranty even though the yards don't realize that they are actually paying for this service and warranty that is pretty much just added into their profit margins. Yes Samsung and LG phones aren't exactly cheap either, but they have way more overhead than other companies. They have special factories and employees just for the curved displays. All their profits basically go back into their R & D and their manufacturing plants. All of Apples profits go straight into their bank accounts.

7. Commentator

Posts: 3723; Member since: Aug 16, 2011

Using word like "egregious" and "crime" make me think how egregious of a crime it is that some people take this so seriously.

34. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Its not really a crime but Apple does runs a tight ship and make insane amount of profits. Apple is the envy of all businesses even the very big and successfully ones like Samsung.

36. HotnReady

Posts: 4; Member since: Nov 27, 2014

Exactly. Companies like LG and Samsung put almost all of their profits into R&D, marketing, paying executives and stuff. They don't want to keep a large profit because that means you have to pay taxes on that profit. They rather pay taxes on 2 cents than pay taxes on $1000. I don't want to attack Apple, but I bet the tax evasion issue has something to do with their profits. I don't follow Apple news so I don't know if the issue has been resolved or not.

5. boosook

Posts: 1442; Member since: Nov 19, 2012

g4 is too big. 5,5'' is too big to be the only alternative. Either you do like samsung and apple (i.e. a flagship that is not much bigger than 5'' like the gs6/iphone6 and a phablet like the note series and iphone6+) or you do like sony, where you sell a big flagship and its compact version (z3/z3c). But relying only on one flagship which is so big means you're cutting out most smartphone users who don't want such a big phone. Motorola will face the same problems with the new moto x.

17. Ruturaj

Posts: 1484; Member since: Oct 16, 2014

I guess after G2 they kinda lost track.

33. TerryTerius unregistered

They sold 10 million G3's. Samsung has sold well over 40 million note series phones so far. The fact that the g4 is bombing doesn't have much to do with size, the numbers just don't bear that out. But it does have everything to do with stiff competition and a saturated market.

6. stijnvbrummelen

Posts: 41; Member since: Dec 20, 2013

I love my G4, but the price kinds of killed it. Last year, the G3 was priced lower than other flagships in the Netherlands. I know 4 people with the G3 and they bought it all because of the price. Now, the G4 is as expensive as the other flagships. I think people tend to choose an Apple or Samsung device if it is the same price. Maybe that is one of the reasons for the lower profit.

18. bur60

Posts: 981; Member since: Jul 07, 2014

Price? Look again at how cheap it is (belsimpel etc)

38. stijnvbrummelen

Posts: 41; Member since: Dec 20, 2013

Yeah. But the S6 is priced the same, which is not a good thing.

8. CreeDiddy

Posts: 2255; Member since: Nov 04, 2011

Android manufacturer's are part of a bubble that has burst. Manufacturer's all throwing into the Android experience, but are losing money as a result of a saturated market. I find it funny that market share doesn't always equal success and long term growth. I have preached that for at least 5 years now.

35. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Still its much better than having to write off billons of dollars like what Microsoft did with their Windows Phone.

39. tedkord

Posts: 17417; Member since: Jun 17, 2009

They didn't lose money. They just didn't make a boatload. Really, HTC is the lone big Android manufacturer that loses money. Samsung makes quite a bit.

9. mrochester

Posts: 1021; Member since: Aug 17, 2014

Isn't Android great?

40. tedkord

Posts: 17417; Member since: Jun 17, 2009

It is. It's the most powerful, functional and flexible mobile OS in the world

10. buccob

Posts: 2975; Member since: Jun 19, 2012

Incoming BobbyBuster comment: "nobody makes money on Android"...

13. Kruze

Posts: 1285; Member since: Dec 30, 2014

Everybody makes money on Android.

25. j2001m

Posts: 3061; Member since: Apr 28, 2014

Everybody saves money with android!!!!

28. hound.master

Posts: 1044; Member since: Feb 27, 2015

Yeah HTC and Sony don't but Asus does it's kind of insane.

26. BaffledTruffle

Posts: 523; Member since: Dec 07, 2013

I was more waiting for the "NO FINGERPRINT SCANNER = FAIL"

12. Kruze

Posts: 1285; Member since: Dec 30, 2014

Damn, even Carl Pei is cocky now. Plus, they're not doing really well, it's just that they achieved more than their expectations.

14. carlemillward unregistered

The issue is that all phones are becoming too alike regardless of the user interface skins. I miss seeing weird shaped phones that had mechanisms and hinges.

16. wargreymon

Posts: 764; Member since: Nov 05, 2013

People want as much screen area as possibe. So you dont have much playroom to use to be unique, except the back.

20. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

Function over form. Having a phone in weird retarded shape like half old Nokia's were is just bad. You want a phone that works well all the time and is easy to use. Not a piece of sculpture that has 0 functionality and is ruining your experience. You are not looking at your phone from a distance you are using it. And using a piece of crap with hinges in a weird shape ruins the experience.

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