LG posts first quarterly loss in 6 years, weak G5 sales to blame


LG Electronics today posted a massive $223.98 million net loss for Q4 2016 – the company's first quarterly operating loss in six years. The poor performance of LG's mobile and vehicle components divisions were named as the two main contributors for the loss.

LG Mobile Communications managed to pull in $3.51 billion in revenue in Q4 2016, which is a 15 percent increase on the previous quarter, but a 23 percent decline year-on-year. The modular G5 was named as the main failure of LG's mobile division, as it was expensive to manufacture and didn't sell nearly well enough.

On the other hand, LG claimed that its V20 flagship saw strong sales, due to its traditional design and mass appeal, but, similarly to Chinese competitor Xiaomi, did not provide any smartphone sales numbers for the fiscal 2016.

Considering how LG's modular experiment didn't pay off with the G5, it isn't surprising that the South Korean tech giant has opted for a less adventurous successor. LG's upcoming G6 flagship will completely ditch modularity in favor of a more traditional, premium design.

“Profitability was hampered by weak sales of the G5 smartphone and higher marketing investments. Introductions of the next G Series phone and mass-tier devices in the second quarter following Mobile World Congress are expected to help greatly improve the LG Mobile Communications Company’s market position in 2017,” LG said in an official statement.

Despite the weak fourth quarter, LG announced a 2016 operating profit of $1.16 billion, up 12.2 percent on 2016, which the company attributed to the strong sales of its home appliances and entertainment systems.

source: LG via AndroidAuthority

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16 Comments

1. Tyrion_Lannister unregistered

G5 was absolute garbage. V20 is an awesome phone but it's backed by poor marketing. Hopefully G6 will be able to compete with S8 and it will have SD835, not 821 like rumors claim.

9. Alter

Posts: 230; Member since: Mar 25, 2016

Absolute garbage? It certainly flopped sales wise and the modularity gimmick was a failure, but the phone itself is decent. Solid specs, speedy, good camera, removable battery, etc. Sure it’s not the best phone of 2016 but in my opinion it’s far from garbage. The rest of your comment I agree with.

10. Tyrion_Lannister unregistered

It had average battery life and the camera was the same as last year. I expect better than that for a phone that costs as much as Samsung's and Apple's flagships. Not to mention the only skins worse than LG's UI are chinese ones like MIUI or EMUI. Even Touchwiz is better now. Take Oneplus 3T for example. It totally outclasses the G5 in almost all aspects and costs much less. The phones that cost in the same range like the S7 and iPhone 7 plus have better SoCs, better screens, better cameras and are overall better phones for the same price. I guess absolute garbage was an overstatement. It was a pretty mediocre phone though and missed on features like waterproofing, stereo speakers and such.

12. Alter

Posts: 230; Member since: Mar 25, 2016

“I guess absolute garbage was an overstatement.” Yes that was my main point and the only reason I posted that comment. Thanks for elaborating.

14. IronTech

Posts: 153; Member since: May 27, 2016

Dumbass! It's 30% cheaper than the other flagships, and the same price to OnePlus 3T in my country. Its main camera beats the S7 camera. Not talking about its wide angle one as a a bonus.

16. Tyrion_Lannister unregistered

Just because it's cheaper in your country doesn't mean it's in every country. In my country it costs more than S7 edge and a lot more than S7. Let alone oneplus 3T.

11. Mxyzptlk unregistered

No it was a terrible terrible phone. He is on point.

13. ebilcake

Posts: 1229; Member since: Jul 16, 2016

Below average battery life and shocking build quality, LG G5 is trash. They were pushing them pretty hard before Christmas, pricing was in line with low end devices and they still couldn't sell them, LG couldn't even give these these things away.

2. Sidewinder

Posts: 515; Member since: Jan 15, 2015

This year ain't gonna be good either for LG if they can't manage to source some sd835 for their G6

3. manojmcn

Posts: 633; Member since: Jul 16, 2015

A G6 with SD 821 chip will make sure there would be no good news for LG in next few quarters....

4. Syracuse

Posts: 69; Member since: Aug 26, 2015

If it's true that the G6 has the 821 they're screwed already. OP4, Xiaomi, Huawei and many more will have much better specs. LG always wants to launch ahead of Samsung and their devices show haste.

5. Bankz

Posts: 2543; Member since: Apr 08, 2016

and are about to post their second quarterly loss..

6. rakhinesmn

Posts: 15; Member since: Jan 18, 2016

No need to blame, G5. All the bad come from G4 Bootloop. Cos of G4 bootloop, i have no trust to LG.

7. Nkukza

Posts: 53; Member since: Feb 19, 2015

No! More like pathetic battery life and lackluster software updates releases. LG is so notorious for putting 2600 to 2800 mah batteries on their high resolution devices. Anyway I stopped buying LG on the day they stopped releasing updates for the so called and acclaimed premium optimus G pro E988. Till todate they have never released even one update for this battery hungry device. I might consider buying their devices again when they install a 4000mah battery on their future devices. But for now thanks.

8. gnppw

Posts: 95; Member since: Jan 28, 2014

They'll lose even more if the G6 comes with SD821.

15. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

The primary reason why LG fail in Smartphone business is their non-commitment attitude towards their existing buyer. If a high percent of your customer had buyer remorse not only will they not buy your future phone, they will tell all their friends, family and anyone else that would lend them their ears. LG is the perfect example of what not to do when you are in the smart phone business. Samsung is their opposite, they release a gimmick Note serie, stick with it and market the hell out of it for all six generations.

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