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LG Falls on Mobile Unit Concern

LG Electronics Inc. (066570), the world’s third-largest maker of mobile phones, fell in Seoul trading after its chief executive officer said a recovery at the handset business may take longer than some analysts expected.

LG Electronics fell 2.3 percent to 92,000 won as of 12:33 p.m., headed for the lowest closing level since March 2009. The stock dropped as much as 3.4 percent earlier in the trading session. South Korea’s Kospi index gained 0.2 percent.

Koo Bon Joon, who took over as CEO in October, told reporters yesterday that it will be difficult for the handset unit to return to profit in the second quarter, according to Sally Lee, a spokeswoman for the Seoul-based company. At least four brokerages including Shinhan Financial Group Co. and Kiwoom Securities Co. predicted in April and May that the mobile-phone division would post a second-quarter profit.

LG’s mobile-phone division had an operating loss of 100.5 billion won ($93 million) in the first three months of the year, contributing to a second straight quarterly loss for the company. Sales and earnings will improve this quarter, helped by new Optimus smartphones running Google Inc. (GOOG)’s Android software and TVs featuring 3-D functions, Chief Financial Officer David Jung said April 27, after LG reported earnings.

Koo also said the TV unit is struggling because of high inventory, according to Lee.

The company’s share in the global mobile-phone market declined to 5.6 percent in the first quarter from 7.6 percent a year earlier, Gartner Inc. said on May 19.

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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