LG Electronics Inc. aims to raise its share in the global handset market to 10 percent in 2006 from 6.4 percent now by offering a bigger selection of products, a company executive said.
LG, which overtook Siemens last year as the world's fourth-biggest handset maker, expected average selling prices and mobile phone sales volume to rise in the end-September quarter from the second quarter, on seasonal demand. But in the longer term, it would consider cutting handset prices to better compete with global leaders Nokia and Motorola, Jae Bae, executive vice president of the Strategy Division of LG's mobile company, told Reuters.
"We aim to grow more than the market grows and set a target of up to 10 percent market share for next year," Bae said. "As we will introduce a series of new models from September, the average selling price and sales volume will grow from the third quarter, compared with the second quarter. The operating margin is also expected to turn to profit from the third quarter."
LG plans to launch about 20 new models in the second half of the year and aims to ship up to 50 new models every year, about half as many as main rival Samsung Electronics Co. Ltd. In the quarter ended June 30, LG maintained its 6.4 percent global market share while Samsung, the third-biggest mobile phone maker, fell to 13 percent from 14.2 percent, according to Strategy Analytics. Finland's Nokia, the world's biggest mobile phone maker, grew its market share by 1.1 percentage points to 32.3 percent. Motorola was second at 18 percent.
Bae did not provide a 2006 sales target for cell phones. In July the company cut its sales forecast by nearly a fifth to around 50 million handsets this year, blaming cut-throat competition in the mobile industry.
"We are studying the possibility of cutting prices with chip makers and components manufacturers," Bae said, although he added the company would focus on producing high-end handsets to improve its brand image. LG's mobile phone division made an operating loss of 4 billion won (approx. U.S. $3.9 million) in the end-June quarter. Margins fell to a negative 0.2 percent from a 3.6 percent profit in the first quarter and compared with 6.4 percent a year ago. More broadly, the company reported a 70 percent fall in quarterly profit in July, hit by tough competition in mobile phones and sliding LCD screen prices. (Reuters)
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