The economy is starting to hurt some handset manufacturers more than others. LG Electronics reported an 84% increase in net profits today, driven by strong sales of handsets.
That comes on top of news from Sony Ericsson that it is going to cut 2,000 jobs in the next 12 months after net income fell more than $330 million compared to a year earlier. Sony Ericsson blamed the decline on low sales for more costly handsets, increased competition and unfavorable exchange rates.
Sony Ericsson and Nokia are both predicting a 10% increase in global handset sales for 2008. Nokia said that growth will come from emerging markets and low-end phone sales. One analyst said LG’s handset shipments likely will increase in the coming quarter but its profit margins will fall because of competitive price pressures.
LG shipped a quarterly record of 27.7 million handsets globally, including such premium models such as Viewty and Voyager. That was up from 24.4 million units in the previous quarter. LG overtook Sony Ericsson in Q1 2008 as the world’s No. 4 handset manufacturer in volume.
The Korean company also said its global operating profit margin for its cell phone division rose to a record 14.4% in Q2, improving on 13.9% in the previous quarter and from 11.6% a year earlier. LG also said its handset division will record double-digit profit margins in the third quarter and that it expects to sell more than 100 million phones this year, up from 80.5 million last year.
Nokia last week said its market share had risen 2 points to 40%, beating analyst forecasts by selling 122 million phones in Q2. The Finnish company’s gains were made at the expense of Sony Ericsson and Motorola. The latter will report its quarterly results July 31. Samsung, the No. 2 manufacturer, will report this week.