Well it was fun while it lasted. It looks like the flagship G2, Flex and the Nexus 5 will be the last we see of LG in the smartphone arena. For a while anyway. What does this mean for the Nexus line??? Back to Samsung??? Or maybe we will finally see a Motorola Nexus. A 5" version of the Motorola X in Nexus form would be a sweet phone for sure.
Here is the bad news.:
A preemptive move to reduce risks
Struggling in the smartphone business, LG Electronics is shifting its focus to TV. As the financial circles began to put pressure on the chaebol conglomerates using funds as their weapon, LG Electronics is believed to have started to make adjustments to send a positive signal to the market. With the year-end reshuffling just in the offing, a massive shake-up of the MC Division (smartphone) and the HE Division (TV) is forecast.
According to the industry on November 19, LG Electronics recently began to make advance adjustments for the manpower restructuring of the MC Division. Currently, the management is known to be trying to choose between a shock treatment focused on reduction in labor force and gradual downsizing. During the year-end season of personnel realignment, it will be possible to sense the general direction of the restructuring of LG Electronics. Transfer of personnel between the MC Division and the HE Division at the top and middle level of managers is likely to be brisker.
LG Electronics is more likely than not to maintain the current level in the R&D sector of the MC Division, but greatly reduce the support organization. Some forecast that LGE would reduce 10% of the entire manpower of the MC Division. LG Electronics has been restructuring the manpower intermittently over the years, e.g. receiving job-change applications from some of the employees of the MC Division. The focus of the restructuring was placed on some support departments like marketing and purchasing. However, it seems that not only the MC Division, but also the entire company will undergo large-scale personnel realignment.
“Recently vice-chairman Koo Bon-joon is often mentioning the smartphone business risk,” a core insider of LG. “In the long run the smartphone business is important, but he is trying to concentrate on the TV business, something that LGE can do well in.”
Although LG Electronics recently released its strategic smartphone G2, its global smartphone market share fell to No. 5 in Q3. LGE was overtaken by Chinese companies Huawei and Lenovo as they rapidly increased smartphone shipments. Its market share fell from 5%-ish to 4.7%.
The pressure from the financial circles, e.g. the main creditor banks, seems to have played a big role. Recently financial institutions seem to be paying much attention to managing the risks of chaebol groups in the wake of the STX and Tongyang crises. The Dongbu Group succumbed to the pressure from financial institutions, and gave up the semiconductor business. It is believed that LG Electronics cannot ignore the concerns in the financial circles over the smartphone business. LGE will reinforce its competency in the smartphone business in the long run, but concentrate its resources on TV to overcome the crisis it faces.
“With the premium market slowing down and Chinese companies charging forward in the sluggish mid-to low-priced market, there is not much choice for LG Electronics,” said a securities analyst. “For starters, it may be better off to improve its financial status by increasing its TV sales, and then invest properly in the smartphone business.”
Source: Korea IT news
