LG projected to become third largest smartphone maker in 2013: Report

Samsung Securities, the South-Korean giant’s financial and investment arm has projected that LG will come up as the third largest smartphone manufacturer in 2013, as reported by the Economic Times. LG is projected to manage a “turnaround” in the first quarter of the next year. This way, the company is touted to strengthen its ranking behind Samsung Mobile and Apple in the second half of the year. In the report, Analyst Harrison Cho, reveals that LG is “at the cusp of a turnaround”, and adds that LG will enhance its market share globally by racing ahead of competition from the likes of Nokia, HTC, and Blackberry-maker Research In Motion (RIM). The report attributes this to the company’s better quality products, cost effectiveness and expanded sales reach. 

Cho, in an attempt to highlight LG’s future offerings, adds that the sales of the Optimus G “are likely” to surpass expectations. He writes, “The phone should hit overseas markets in November, and successors (such as the V2 and GK) should bolster consumer confidence in LG’s products. On balance, we believe its handset business will turn around in 2013.” LG is also Samsung Securities’ current top pick for the technology sector."

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Optimus G sales expected to surpass expectations

“For LGE to achieve a turnaround, Koreans need to first take to the Optimus G. LG’s past hit models have been received well at home first, before being exported to Japan, the US, and Europe. Better-than-expected domestic shipments of the Optimus G would likely be followed by a gradual increase in exports of G series models. LG Uplus promotions helped the Optimus LTE series sell well initially, but the product soon fizzled both domestically and overseas. We believe the Optimus G, however, will sustain strong sales thank to features and design that surpass precursors and rival models,” Cho writes indicating the company’s game plan for the smartphone space.  

Elaborating on his forecast that LG will race ahead of its competitors to consolidate its market position, Cho says, “We believe they have more upside, expecting LG’s: 1) handset division to swing to a profit in 1Q13—we estimate breakeven quarterly sales and smartphone shipments for the unit at KRW2.5t and 8m-9m units, respectively; 2) global smartphone market share to rise from 4.0% in 2012 to 5.8% in 4Q13, at the expense of second-tier players Nokia, Research in Motion, and HTC." 

“LGE compares favorably with smartphone pioneer HTC (which controlled 6.3% of the market in 2Q) in hardware and operating system compatibility, and should benefit as Nokia (7%) and Research in Motion (5.3%) lose ground in OS competitiveness. Cost competitiveness is key to surviving smartphone hardware competition, and requires an established supply chain and sufficient global coverage to ship 10m smartphones per quarter. LGE is more competitive than Motorola, Sony, and Chinese firms, whose sales exposure is more regionally focused.”