LG to Boost Smartphone Sales 52% in Shift From Basic Handsets

LG Electronics Inc. (066570) intends to boost smartphone shipments 52 percent this year after a shift away from basic devices ended a streak of two straight annual losses at its phone-making division.

The company plans to sell 40 million smartphones this year, helped by rising demand in emerging markets, Park Jong Seok, head of its mobile-communications division, said ahead of the Mobile World Congress, which starts today in Barcelona. LG sold 26.3 million smartphones last year and 20.2 million in 2011.

South Korea’s No. 2 phone-maker will roll out the upgraded Optimus G Pro in overseas markets this year as it seeks to lure buyers from Apple Inc. (AAPL)’s iPhone and Samsung Electronics Co.’s Galaxy lineup. The Seoul-based company is turning more toward the premium sector after its total phone sales halved in two years amid slowing demand for basic models competing with handsets from Chinese manufacturers led by ZTE Corp. (000063)

“LG’s brand image in the premium league has improved,” said Kim Ki Young, an analyst at Seoul-based LIG Investment & Securities Co. “The company also seems to have higher growth potential than HTC and BlackBerry.”

HTC Corp., whose global smartphone market share has fallen by more than half in 18 months, introduced the One model last week. BlackBerry, the struggling smartphone maker, is rolling out its new BlackBerry 10 lineup this year.

Smartphone First

ZTE plans to boost smartphone sales 50 percent from last year’s tally of 35 million, the company said last month. The Shenzhen, China-based company surpassed LG as the world’s fourth-biggest phonemaker last year, according to International Data Corp.

Smartphones accounted for more than 50 percent of LG’s phone shipments for the first time in the fourth quarter of 2012. The phone division posted an operating profit of 58.6 billion won ($54 million) last year.

“The developed markets are becoming ever more saturated,” Park said. “In the smartphone area, we definitely felt the need to diversify our business portfolio.”

The Optimus G Pro, which went on sale in South Korea last week, features a Qualcomm Inc. quad-core processor and a 13- megapixel rear-facing camera. The device also has a function that lets users record from the front and rear cameras simultaneously. Like all LG smartphones, the new model runs on Google Inc.’s Android operating system. The device is mainly aimed at developed markets.

China, Middle East

LG also plans to focus on high-end smartphones in China because of competition in the low end of the market from local suppliers. In other parts of Asia, as well as in Latin America, the Middle East and Africa, LG is more focused on low-end smartphones with its Optimus L products.

Last year, LG sold 56.6 million mobile phones, including both smartphones and more basic models. That compares with 116.7 million in 2010, according to IDC data compiled by Bloomberg.

The company dropped to fifth from fourth in global phone sales last year after being surpassed by ZTE. Its total shipments fell 37 percent to 55.9 million, according to the market researcher.

In the smartphone market, LG was outside the top five. Samsung was top with sales of 215.8 million, or a 30 percent share. It was followed by Apple, Nokia Oyj (NOK1V), HTC and BlackBerry.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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