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OLED Costs and Weak Smartphone Sales Force LG to Call for Patience

South Korean electronics giant LG has been in a few doldrums for the past few quarters and the crisis intensified after the company posted losses that were even bigger than analysts’ estimates. In such a situation, it is usually sensible for the company to issue a statement that is supposed to calm the nerves of investors and that is what LG did. The company has stated that the fact that it invested heavily in organic light-emitting diode (OLED) is one of the primary reasons behind the poor financials of the company at this point. In addition to that, smartphone sales have been a disappointment as well, which is why they have called for patience. However, at the same time, LG has mentioned that 2019 is going to be a tough year for them and the weakness is perhaps going to continue.

The Chief Financial Officer at LG Suh Dong-hee conducted a conference call during the course of which he laid out the current difficulties that are facing the company. He stated that the weak demand for smartphones and many of the other items sold by LG is the primary reason behind the poor show. He went on to stated, “This year will require patience.” Despite LG’s long-term investment on OLED, the company’s continuing troubles in the smartphone space is a cause for concern. Even though LG has brought out a range of new smartphones, none of those products quite caught the fancy of customers. This year, it is going to launch a foldable smartphone, and it remains to be seen if it can garner any interest or not.

An analyst at BNK Securities spoke about LG’s troubles in the smartphone segment. He said, “There doesn’t seem to be enough phones that are attractive enough to win over consumers, meaning there isn’t a high demand for LG Display’s panels.” Analysts had estimated that the company was going to post a loss of 104 billion won for the quarter, but in a shocking development, LG posted total losses of 132 billion won. Needless to say, such development must have led to hard questions from investors and perhaps there was no other option for LG but to issue a statement calling for some the investors and the market at large to be patient. It remains to be seen whether this gambit works or not.

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