LG Makes Major Cuts to its Struggling Mobile Phone Division: Report

By Beecher Tuttle September 08, 2011

It seems as if the sheer dominance of Apple and Samsung has claimed yet another victim in the global smartphone race. Various South Korean news outlets reported on Thursday that LG Electronics has cut around 30 percent of its workforce in its overseas mobile phone division.

The world's third largest phone maker is said to have closed several unprofitable business units as well as made significant layoffs in its mobile marketing and purchasing departments, Reuters reported, citing a news report from the Korea Economic Daily.

The South Korean-based electronics firm is also planning on making similar domestic cuts, says the paper. An LG spokesperson told Reuters that the report was mere speculation.

LG has seen its global smartphone market share drop considerably over the last 18 months, as high-end handset manufacturers Apple and Samsung have made considerable strides. LG's handset business has failed to climb into the black since early 2010, even though it actually narrowed its operating loss in the second quarter of 2011.

The layoffs became a near inevitability after LG announced in July that it was lowering its full-year smartphone sales target by 20 percent. The company is now expecting to sell around 24 million handsets in 2011, down from the 30 million units that it originally anticipated.

LG's mobile business head, Park Jong Seok, said in July that the unit was “slowly” improving, but clearly not enough to avoid workforce reductions.

The South Korean company will be following in line with competitors Nokia and Research in Motion, which each announced major layoffs earlier this year due to their losing battle in the smartphone race.

Struggling RIM cut around 2,000 jobs, or more than 10 percent of its workforce, in July following weak earnings for the quarter ending in May and a dismal outlook for the rest of the year. Finnish cell phone maker Nokia also made considerable cuts, although many of the layoffs were in the R&D division, which it is pairing down due to the company's upcoming alliance with Microsoft.

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Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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