LG Elec set to post heavy Q4 loss, shares fall

LG Electronics Inc, the world's No. 2 TV brand and No. 3 mobile phone maker, is set to post a sharp fourth-quarter loss, hurt by steep price declines and a late entry into the lucrative smartphone market.

Seoul: LG Electronics Inc, the world's No. 2 TV brand and No. 3 mobile phone maker, is set to post a sharp fourth-quarter loss, hurt by steep price declines and a late entry into the lucrative smartphone market.

LG shares slipped almost 4 percent on Wednesday amid concerns that the results, due out around 0400 GMT, may be worse than feared.

"Investors are growing jittery ahead of consolidated results, especially as the parent-based figures showed more than a 1 trillion won in operating loss," said Yoon Hyuk-jin, an analyst at Shinyoung Securities.

"The market expects bad numbers, but it is growing more nervous as it waits."

LG Electronics on Wednesday reported a 1.1 trillion won (USD 981 million) in parent-based 2010 operating loss, ahead of the more closely watched consolidated results.

The South Korean company, which competes with bigger rival Samsung Electronics, is expected to report a October-December operating loss of 165 billion won (USD 147 million), its second consecutive quarterly loss, a poll by Thomson Reuters I/B/E/S showed.

According to Starmine SmartEstimates, which places more weight on recent forecasts by top-rated analysts, LG Electronics was expected to report a record 336 billion won loss in the quarter.

It is the first major Asian electronics firm to report quarterly results and may take a more cautious view on the outlook compared with its key rivals, due to costs related to legacy phone models and heavy marketing expenses to boost volume shipment, as it has virtually zero market share in smartphones.

Samsung Electronics unveils its results on Friday. Shares in Nokia fell 3.5 percent on Tuesday on fears of a profit warning from the world's top cellphone maker by volume when it reports earnings on Thursday.

Under founding family scion Koo Bon-joon, who took the top job at LG in October to revive its struggling phone business, LG is slowly regaining lost ground with premium models such as Optimus 2X and Optimus Black smartphones and new 3D and Internet television lineups.

But its late-entry into the high-end smartphone market, half-a-year after Apple introduced the iPhone 4 and Samsung unveiled Galaxy S, means LG's phone business may remain in the red in the first half of 2011, analysts said.

Weaker-than-expected consumer demand for TVs and price competition from the likes of Sony Corp and Panasonic Corp are also expected to deal a blow to LG, the world's No.2 TV brand after Samsung.

Shares in LG, which trails Nokia and Samsung Electronics in handsets, have risen by a third from recent lows in November, beating a 10 percent gain in the KOSPI.

LG Electronics on Wednesday proposed a 200 won per share for year-end dividend.

Bureau Report

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