SEOUL, South Korea (AP) — LG Electronics reported a lower quarterly profit as its mobile phone division sank to a loss and forecast its earnings to deteriorate further, underlining the challenges for its smartphone business as it struggles with competition from Apple and Samsung.
The South Korean company said Wednesday its April-June net income totaled 159 billion won ($138 million) on revenue of 12.9 trillion won.
Quarterly income was up nearly 50 percent from a year earlier but fell 35 percent from the previous three months.
The quarter-on-quarter drop was a source of concern for investors as sales of consumer electronics are usually stronger in the second quarter. Shares of LG Electronics Inc. fell 2.1 percent in Seoul, compared with the benchmark Kospi's 1.4 percent decline.
LG, which was unseated by Apple Inc. in 2011 as the world's No. 3 mobile phone maker by sales, blamed its lower profit on the mobile division's 57 billion won quarterly operating loss. That partly offset profit from LG's TV business.
Basic handset sales declined while expenses to promote its new smartphones went up, LG said.
The mobile business of LG Electronics is being squeezed in both the premium and low-end markets. Chinese handset makers ZTE and Huawei are aggressively increasing low-cost smartphone sales while Apple and Samsung Electronics Co. leave little room for a third player in the top-end market.
The second-quarter mobile loss comes after the division briefly enjoyed two consecutive quarters of profit. LG's mobile division lost nearly 1 trillion won in 2010 and 2011 combined as its Optimus smartphone series failed to compete with Samsung's Galaxy phone and Apple's iPhone.
LG said its third-quarter operating profit will moderately decrease from the second quarter, even as sales go up by a small margin.
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