LG turnaround: work in progress

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LG turnaround: work in progress


A year ago, LG Electronics found itself in one of the biggest crises of its history.

The global electronics giant surprised the industry by announcing record operating losses in the second half of last year. It was the first time the company swung into the red since it started to report consolidated earnings in 2007.

This was an embarrassment for LG and its parent company, LG Group, components of Korea’s fourth-largest family-run business conglomerate.

In response, the family sent one of its own to the CEO’s position ?? Koo Bon-joon, who is the grandson of LG Group founder Koo In-hwoi (1907-1969), and the younger brother of LG Group chairman Koo Bon-moo.

What LG needed, the family evidently decided, was not a nice tap on the shoulder but some type of shock treatment. Koo, like others in his family, has been described as “fierce,” “competitive,” “bold” and “aggressive.”

His job was to return to profitability the world’s leading producer of washing machines, the No. 2 global manufacturer of flat-screen televisions and the world’s No. 3 in mobile phone production. So has Koo, an avid baseball fan, been effective in his role as a relief pitcher?

Meeting with reporters at the start of this year, Koo played down his role, saying: “Just because a CEO changes, a big company like LG doesn’t change overnight. LG is an aircraft carrier, not a sailboat.”

But changes are evident at LG over the past year, and most of them have to do with Koo being a member of the family that owns the group as well as chief executive. He can make bold, aggressive management and investment decisions without fear of what other managers think of him, of getting demoted or of losing his job.

Boosting R&D, looking ahead


With a belief that LG should go back to the basics and roll out high-quality, competitive products, Koo strengthened the R&D function, giving specialists there special titles and treatment.

Preparing for the future was also on Koo’s mind. He acquired LS Mtron’s air-conditioning business to expand LG’s visibility in energy and Daewoo ENTEC to expand its water treatment business. The two subsidiaries are seen internally as LG’s future growth engines.

The company will also build an R&D and production complex for sectors in which it hopes to excel, like water treatment, solar energy and LED lighting. The complex, to be located in Pyeongtaek, Gyeonggi, will cover 2.78 million square meters and cost over a trillion won ($900 million) by 2014.

An LG official said: “Such decisions are things that only a Koo can make,” and added, “Compared to before, decision-making is happening much faster and more aggressively as a result of Koo’s presence.”

Another LG employee said: “Change may not be that evident from the outside, but it’s clear within how morale has gotten high among employees. Many are expecting that good times will come soon.”

Overall, LG swung into the black in the first quarter, after three straight quarters in the red. It posted 130.5 billion won in operating profits in the first quarter and 158.2 billion won in the second quarter.

But when times were good, the company considered a trillion won in operating profits per quarter to be normal. So there is still a long way to go, most critics say.

Mobile is still a drag

The biggest challenge lies in the mobile phone business.

LG has rolled out new additions to its Optimus family, which is the company’s premium smartphone line. They include the Optimus 2X, Optimus Black and Optimus 3D.

But none have yet proved to be the mega-hit that Samsung’s Galaxy or Apple’s iPhone have been. In fact, LG’s mobile phone division did not even take part in the IFA (Internationale Funkausstellung) consumer electronics trade show that wrapped up its six-day run early this month in Berlin, Germany.

The official reason was that LG wanted to focus on its 3-D product line-up: TVs, projectors and PC monitors, among others.

But sources also say the decision was guided by the lack of a showstopper in LG’s mobile products. For that reason, the company also has not seemed to think deeply about mobile software platforms.

Technology companies are highly focused in either developing their own platform or acquiring a business with that capability, as hardware alone is not seen as a formula for success in today’s IT markets.

“LG will focus on what it does the best,” an LG official said. “We have no plans to develop our own operating system.”

But what is worrisome to critics is that when LG finally catches up in hardware and wants to invest in a mobile software platform, it may be a step too late ?? again. The main reason its mobile business sank was that it was late to the smartphone party.

By Kim Hyung-eun [hkim@joongang.co.kr]

한글 관련 기사 [머니투데이]

LG전자 구본준호 1년… LG폰 영광 회복 언제?

모바일 사업부 내년에야 흑자 가능… 허울뿐인 세계 최초 `명예`

그룹 오너일가가 나섰지만 시장평가는 냉정했다. 구본준 부회장(사진)이 LG전자 사령탑을 맡은 지 1년. 한때 삼성전자를 넘보던 `LG폰`의 영광을 되찾기에 아직은 갈 길이 먼 모습이다.

2009년 2분기 LG전자 모바일 사업부는 사상처음으로 분기 매출 5조원을 넘어섰다. 국내 휴대폰시장 점유율은 30% 이상을 차지하면서 삼성전자마저 넘볼 기세였다. 당시 휴대폰 사업을 책임지고 있는 안승권 사장은 `2012년 글로벌 톱2 도약`이라는 야심찬 목표까지 발표했다.

하지만 이때가 LG폰의 정점이었다. 2009년 하반기 아이폰 열풍에 몸살을 앓더니 2010년 2분기에는 모바일 사업부가 적자로 돌아섰다. 대표인 남용 부회장은 실적 부진에 책임을 지고 자진 사퇴했다.

구본무 LG그룹 회장은 친동생인 구본준 부회장을 LG전자를 구할 `소방수`로 긴급 투입했다. 구 부회장이 독한 실행력을 강조하면서 LG폰에는 회복 분위기가 돌았다.

모바일 사업부 영업적자는 2010년 3분기 3257억원에서 올해 2분기 539억원으로 개선됐다. 이익이 높은 스마트폰 판매비중도 높아졌다. 세계 최초 듀얼코어 프로세서를 탑재한 `옵티머스2X`나 세계 최초 무안경 3D 스마트폰인 `옵티머스3D`도 탄생했다. 스마트폰 시장 대응은 늦었지만 빠르게 따라가려는 노력의 결과다.

하지만 과거 영광을 회복하는데 1년이라는 시간은 짧다. 회사측은 올해 4분기 모바일 사업부의 턴어라운드를 기대하고 있으나 시장에서는 내년 1분기 이후에나 가능할 것으로 보고 있다. 미래에셋증권은 내년 3분기에야 영업흑자를 보일 것으로 예상했다. 무려 9분기 연속 적자다.

실적 개선에 대한 평가도 냉정하다. 매출 회복보다는 `마른 수건 짜기`에서 나오고 있다는 지적이다. 해외 인력을 당초보다 일찍 복귀시키고 있고 중국과 유럽의 연구개발(R&D)센터는 실적을 이유로 통폐합했다. 국내 인력 감축도 착수할 예정이다.

내놓은 스마트폰도 세계 최초라는 명예를 얻었지만 실속에선 후한 점수를 얻지 못하고 있다. 옵티머스2X는 100만대 돌파에 5개월 이상 걸렸다. 삼성전자의 `갤럭시S`가 85일, `갤럭시S2`는 55일만에 300만대를 넘어선 실적에 비하면 한참 모자라다.

특히 옵티머스 3D는 올해초 공개해놓고 6개월이 지난 이달부터 북미시장에 판매하고 있다. 판매 시기를 실기한 것 아니냐는 평가다.

사후 관리도 문제로 지적되고 있다. 옵티머스원의 경우 출시한지 1년이 돼가지만 아직도 최신 운영체제(OS)로 업데이트가 되지 않고 있다. 업계 관계자는 "새로운 스마트폰을 내놓는 것도 중요하지만 기존 사용자들을 위해 지속적인 업그레이드도 중요하다"며 "하지만 LG전자는 사후서비스에 소홀하다"고 지적했다.

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