LG axes CEO due to the botched mobile strategy
Well, this is anything but unexpected for those who’ve been following LG’s mobile division for the past few months.
In the second quarter of this year, LG Electronics (which is the flagship company in the LG Group and makes phones, TVs and other electronics) saw its profit plunge a whopping 90% compared to the record profit they had a year before. Furthermore, the mobile division posted losses of over $100 million in that quarter alone.
Add to that their inability to deliver a range of well-specced, high-quality desirable smartphones (despite saying that they would, not once, but twice) and you can see why the board would want the CEO to go.
And go he did. Nam Yong, the CEO of LG Electronics, has resigned “to take responsibility for poor management”. He has been CEO for the past 4 years and will remain in this position until March, when he will be replaced by Koo Bon-joon, the younger brother of LG Group chairman Koo Bon-moo.
The poor performance of LG Electronics was mainly the fault of the mobile division, so perhaps new management will finally make LG’s smartphone dreams come true. And it should, because otherwise LG risks being relegated to being (as it mostly is today) solely a featurephone manufacturer. Which isn’t good, because profit margins in that business are significantly lower than in the lucrative smartphone space.
Let’s hope LG makes it and will become one of the key contenders in the smartphone space. More competition is always better, so to speak.