Sad LG: High-level blood change brilliant into a burden it will give up the smartphone business?

On November 28th LG Electronics, the South Korean home appliance giant, announced a major personnel change on its website, which resulted in the reappointment of the company’s CHIEF executive (CEO), CFO (Chief Financial Officer) and other top management, as well as the addition of cSO (Chief Strategy Officer). LG Electronics said in a statement:

The new leadership team will focus on accelerating LG’s “digital transformation” in all business areas over the next few years to make it more data-centric.

Net profit plunges, LG Electronics CEO changes

Prior to this personnel change, LG Electronics’ CEO was Jo Seong-Jin, who was also the Vice Chairman of LG Electronics.

Sad LG: High-level blood change brilliant into a burden it will give up the smartphone business?

The 63-year-old is a veteran of LG, who joined the LG Group in 1976 and has a 43-year CAREER at LG, where he was promoted to vice chairman of LG Electronics in December 2016 and whose term as vice chairman was extended in March 2018 three years.

It’s worth noting that Mr. Qiao is the first executive in a large South Korean conglomerate to have no college degree.

However, under the leadership of Joe Jin, LG Electronics’ overall development is not good. From a financial perspective, LG Electronics’ second-quarter 2019 earnings report showed that, despite strong performance in the home appliance division, LG Electronics’ second-quarter net profit fell 67.5 percent year-on-year, while LG’s third-quarter results were down 67.5 percent year-on-year, dragged down by a loss of 313 billion won from its mobile business. Electronics’ net profit also plunged 30.5 per cent.

Based on this performance, Mr. Qiao tendered his resignation to Koo Kwang-mo, the 41-year-old chairman of LG Group, and wants to hand over leadership to the next generation of management to drive change.

In this change, he took over as CEO of LG Electronics, 56-year-old Brian Kwon, head of LG’s mobile device and television business. Brian Kwon graduated from Seoul National University in Korea with a major in industrial engineering and later an MBA from Aalto University in Finland, where he has 32 years of experience with LG in areas such as big data, artificial intelligence and cloud technology. At LG Electronics, he was head of LG TV and was named head of the mobile business in a 2018 reshuffle.

Sad LG: High-level blood change brilliant into a burden it will give up the smartphone business?

LG also released a photo of Joe And her successor, Brian Kwon, smiling and hugging each other.

In addition to LG Electronics’ CEO, LG has also replaced its Chief Financial Officer and created a new Position of Chief Strategic Officer (CSO), led by William Cho, who has led LG’s growth in North America for the past six years.

Regarding this management change, LG Electronics said:

LG will continue to focus on future core technologies and general-purpose technologies and establish future technology centers to support existing aI labs, advanced robotics labs, and software business project management offices in CTO departments. Businesses with strong potential, such as smart homes, content partnerships and beauty treatments, will be supported and expanded in the future.

LG Electronics gets bogged down in smartphone businessĀ 

Although LG Electronics has not been without personnel changes, but this time LG Electronics’ collective personnel changes still appear to be extraordinary.

LG Electronics itself is a core asset of the LG Group, and LG Electronics is South Korea’s second-largest electronics company after Samsung, producing a range of products, including mobile phones, Televisions, Air Conditioners, Washing Machines and Refrigerators .

LG Electronics’ smartphone business has struggled, while LG’s mobile communications division, which runs the smartphone business, has been losing money for years. Public data show that the division lost 1.25 trillion won ($1.1 billion) in 2016 and 721 billion won in 2017 and continued to lose $700 million in 2018.

There’s another thing that’s a little bit related to Chinese consumers – on February 2, 2018, in front of a reporter from China Business Daily, a representative of LG’s Beijing office said that LG’s mobile phone business had pulled out of China.

Of course, while the mobile phone business has left China, LG’s mobile business continues to operate in North America (however, according to Canaly data, LG shipped only 4.8 million units in the U.S. smartphone market in 2019, down 24% year-on-year).

As we look at 2019, the smartphone business continues to put LG Electronics behind.

Sad LG: High-level blood change brilliant into a burden it will give up the smartphone business?

LG’s mobile revenue continued to decline, while LG’s net profit fell 19 percent, according to LG Electronics’ first-quarter 2019 results, which LG officials said were a drag on the mobile business and increased competition in the tv industry. LG Mobile posted an operating deficit of 313 billion won in the second quarter, up 54% from a month earlier, and LG Electronics said the poor performance was due to higher marketing costs for its first 5G handset, the V50 ThinQ, and flat sales of other flagship phones and low-end devices. LG Electronics’ net profit also plunged 30.5 percent in the third quarter, largely because of weak sales in its smartphone business.

It is worth noting that LG’s smartphone division has lost money for 18 consecutive quarters as of October 2019.

Earlier, at CES in early 2019, LG Electronics CEO Joe Hockey also said LG Electronics would not exit the smartphone business, saying:

The company will continue to retain its loss-making smartphone business because it is important to the company’s IoT ecosystem. LG’s portfolio includes the automotive and home appliance divisions, all of which are related to smartphones, so we’re not considering exiting the smartphone business.

Mr. Joe also stressed that 2019 is the second year that LG Electronics is trying to restructure its smartphone business, which will continue until 2020;

But now LG’s smartphone business is becoming increasingly variable with Mr. Qiao’s resignation.

The impressive generation of mobile phone giantsĀ 

LG used to be a generation of mobile phone giants.

In the era of feature machines, its “chocolate” phones were a fashion fad, with LG announcing in February 2009 that it had sold 100.7 million handsets in 2008, surpassing Motorola and Sony Ericsson as the world’s third-largest after Nokia and Samsung.

Sad LG: High-level blood change brilliant into a burden it will give up the smartphone business?

And in the smartphone era, LG is no shortage of brilliance. Lg was the third largest global smartphone market in the second quarter of 2013, despite the ongoing mistakes and a sense of presence in the Chinese market that is virtually zero. But for the last two years, LG’s smartphone business has been in a state of disarray. Lg’s share of global smartphone shipments in 2018 will be just 3%, according to MarketResearch, a market research firm.

Yes, Joe did say in the name of LG Electronics CEO that he would not give up the smartphone business, but when he left in this way, the new CEO took office – so can LG’s smartphone business survive?

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