L G ELECTRONICS
Electronics, Inc. was established in 1958 as the pioneer in the Korean
consumer electronics market. The company is a major global force in
electronics and information and communications products with more than
64,000 employees working in 76 overseas subsidiaries and marketing
units around the world. With annual total revenues of more than US
$16.9 billion (non-consolidated), LG Electronics comprises three main
business companies: Digital Display & Media, Digital Appliance,
Telecommunication Equipment & Handset.
LG Telecommunication Equipment & Handset Company provides total
solutions ranging from wired and wireless handsets to
telecommunication equipment. The company is a leader in the innovation
and development of cutting-edge technologies in next-generation
wireless telecommunications and is steadily expanding its global
market share in 3G (WCDMA / cdma2000) wireless systems.
Electronics' goal is to enable the intelligent networking of digital
products that will make consumers' lives better than ever. For more
information, please visit www.lgusa.com.
G Computer components
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was hard to miss the ambitions of LG Electronics at the giant Consumer
Electronics Show in Las Vegas in early January. LG's happy-face logo
and pictures of its phones were plastered on banners running almost
half a kilometer in any direction from the convention center just off
the Strip. Inside the hall, 42-inch LG plasma TVs displayed maps of
the sprawling exhibit a
LG: The Next Samsung?
Bested by its giant rival after the Asian economic
crisis, LG is fighting a fierce battle to become a respected global
its 1,700-square-meter booth, the company showed off a plethora of new
products, ranging from a $180 MP3 player the size of a matchbook to a
71-inch plasma TV (price: $77,000) meant to outshine anything offered
by Sony (SNE ),
Samsung, or Panasonic (MC
). "You shouldn't be second-tier forever," says LG Chief
Executive Kim Ssang Su. "We've got to be a top-notch
CLIMBING MT. GUMSU. Sound familiar?
It should. That's the kind of talk the industry has been hearing for
years from LG's crosstown rival, Samsung Electronics. Under Kim, who
took over in October, 2003, LG is aiming for the major leagues. A
60-year-old LG lifer, Kim is determined to turn the company into a
digital trendsetter -- and by 2010, into one of the world's top three
home electronics players. "We must be a great company with great
people," he declares.
Kim's given name, Ssang Su, translates literally as "doubly
outstanding." And that's what this tough Korean boss expects all
his lieutenants to be. He has ordered each of LG's three divisions --
mobile phones, digital displays, and appliances -- to improve
productivity by 30%. And each unit is required to draw up both annual
and three-year battle plans for attacking the world of digital
To drive home the message, a year ago he summoned LG's top managers
from around the world -- 256 in all -- to a golf and tennis resort
near the central Korean city of Jaechon for a two-day "bonding
workshop." There, they all raised their right hands and pledged
dedication to the cause of making LG a global brand. Then the execs
gulped down shots of soju, the potent Korean spirit, and
shouted "Global Top Three" in unison. The next day the
entire contingent set off to climb the 1,016-meter Mt. Gumsu.
G Mobile phones
OBSESSED WITH SAMSUNG. It's like
Korea in the old days, when the chaebol laid siege to one
global industry after another. Except many of those forays were
exercises in profitless expansion, while LG is making money -- at
least at this stage of the game. Sales grew an estimated 21%, to $23.6
billion, in 2004, with net profits expected to more than double, to
$1.5 billion. The company is the world's top maker of household air
conditioners and the No.3 plasma-TV maker, while its joint venture
LG.Philips LCD is the world's largest maker of liquid-crystal displays
A latecomer to mobile phones, LG boosted it sales of handsets from 6.9
million in 2000 to 44 million last year, and it's the top supplier to
American carrier Verizon Wireless. In September, LG overtook
Japanese-Swedish venture Sony Ericsson Mobile Communications, claiming
7% of the global handset market, according to researcher Strategy
Analytics. It's now at No.5, after Nokia (NOK
), Motorola (MOT ),
Samsung, and Siemens (SI
). Consumers love its whimsical designs, such as the LG-350, with its
seven-color blinking lights to signal incoming calls. Investors like
LG's shares, which have jumped 37% in the past five months.
Despite all the success, LG remains obsessed with Samsung. Until the
mid-1990s the two companies were neck-and-neck in the race to become
Korea's top electronics producer. Both were hit hard by the Asian
economic crisis in 1997, but Samsung began a painful restructuring and
expensive brand-building push that catapulted it into the ranks of
LG, on the other hand, spun its wheels, making an ill-timed bet on
telecommunications -- everything from wired and wireless services to
switching systems -- just when those businesses hit the skids. LG's
botched strategy touched off an investor panic in 2000. Its shares
plunged by 75%.
THE SPEED FACTOR. Today that
over-the-top telecom strategy is history -- and LG execs admit that
they have a lot to learn from Samsung. CEO Kim speaks highly of the
way Samsung pushed its employees "to the brink of the cliff"
by creating a sense of crisis to speed the pace of change. Chief
Financial Officer Kwon Young Soo marvels at Samsung's handset design
skills: "Our quality is almost the same, but design-wise, Samsung
is better," he says. And Park Mun Hwa, who heads LG's handset
business, says he uses Samsung's strategy as a template for his own.
"Samsung is our teacher," he says.
LG isn't a pure copycat of Samsung, though. For starters, Samsung has
a dynamic chip unit, which at the high end of the business cycle can
provide a huge boost to its profits. LG spun off its chip division
five years ago. Still, Kim sees a way to outmaneuver Samsung in two
ways. One is speed: LG beat Samsung in rolling out camera phones and
MP3 phones in the U.S.
The other tactic is product differentiation. The company sells its
high-end goods under the LG name, and lower-priced electronics as
Zenith, a U.S. brand it bought in 1996. (A third brand, GoldStar, is
being phased out.) This strategy allows LG to expand market share fast
without tainting the LG brand.
SHEDDING LUCKY-GOLDSTAR. Although LG
isn't anywhere as well-known as Samsung, it's being taken far more
seriously than it used to be by carriers and consumers alike. Last
year it sold 3 million pricey third-generation cell phones to
Hutchison Whampoa (HUWHY
), making it the largest supplier of 3G phones to the Hong Kong-based
company, which has networks in eight Asian and European countries.
LG, which doubled its U.S. handset shipments to 20 million in 2004,
expects its American phone sales to rise 70% more this year. Last year
it sold 11 million handsets to Verizon Wireless and 6 million to
Cingular Wireless and its merger partner, AT&T Wireless. And this
year, Cingular selected LG as the featured vendor for a phone it's
promoting on the American Idol TV show. LG "has developed
an attractive portfolio of handsets with respectable quality,"
says Mike Cost, who oversees Cingular's handset purchases.
LG has come a long way from the days when it was known as Lucky-GoldStar
-- a name LG would just as soon forget. Ask executives what LG stands
for and they'll tell you "Life's Good," the slogan marketers
dreamed up a year ago to retrofit the company's name. Founded in 1958
as a maker of fans, GoldStar Co. became Korea's first electronics
company a year later when it started manufacturing radios. The outfit
eventually made everything from refrigerators to elevators and
G dealer certificate
ELECTRONICS FORMS STRATEGIC ALLIANCE WITH HOME DEPOT
Electronics said Thursday it formed a strategic alliance with Home
Depot, the largest home goods chain in the U.S., to sell its home
appliances. LGE will start selling refrigerators, washing machines and
dishwashers at Home Depot's 1,800 outlets in the U.S. starting from
the second quarter. LGE has been supplying home appliances to the
U.S.'s largest home appliance store Best Buy since 2003.
Stocks Extend Gains in U.S. on Samsung; LG.Philips Surges
14 (Bloomberg) -- Asian computer-related shares extended gains in the
U.S., led by LG.Philips LCD Co., after Samsung Electronics Co.
reported profit that beat analysts' estimates and said it will
increase capital spending.
Bank of New York Co.'s Asia ADR Index, which tracks the region's
American depositary receipts, rose 1.2 percent to 111.13, completing
the week with a 1.6 percent gain.
Asia's biggest electronics maker, said fourth- quarter net income was
1.8 trillion won ($1.74 billion), topping the median 1.4 trillion won
estimate from 19 analysts surveyed by Bloomberg News. The South Korean
company forecast a shortage of liquid-crystal displays for use in
computers and mobile phones in the fourth quarter of this year after
three quarters of oversupply.
LCD Co., the world's second-biggest LCD maker after Samsung, surged
$2.80 to $21. AU Optronics Corp., the third largest, climbed 96 cents
technology shares rallied in local trading after Samsung's
announcement, helping lift the Morgan Stanley Capital International
Asia-Pacific Index 0.1 percent.
225 Stock Average futures expiring in March closed at 11,490 in
Chicago, up from 11,430 in Singapore and 11,450 in Osaka.
Electronics is poised to use its digital TV-related core
competitiveness in the three areas of core chip sets, display
components (vertical sequencing), and software, as well as patents on
digital TV transmission technologies (VSB/EVSB), and thus aggressively
penetrate the rapidly-growing digital TV market (please refer to LG
Electronics' Digital TV Competitiveness below).
LG Electronics has posted the first-spot share in the PDPTV market in
17 nations including Britain, Germany, Spain, Australia, Saudi Arabia,
and South Africa, and will expand the number of nations where it will
post the largest market share to 30 by 2005.
Meanwhile, to aggressively explore overseas markets, LG Electronics
has structured digital TV production bases in the three overseas hubs
of North America (Mexico), Europe (Poland), and China (Shenyang and
Nanjing). The company is set to continue to analyze customer needs by
region and conduct region-suited marketing campaigns.
The global PDPTV market is estimated at 3.5 million units for this
year, and North America and Europe are continuously increasing their
demand, and emerging markets are broadening its base. As such, the
global PDPTV market will likely continue to expand to 6.3 million
units by 2005, 10 million units by 2006, and 12 million units by 2007.
About LG Electronics, Inc.
LG Electronics, Inc. (CEO: S.S. Kim, 06657.KS) was established in 1958
as the pioneer in the Korean consumer electronics market. The company
is a major global force in electronics and information and
communications products with more than 64,000 employees working in 75
overseas subsidiaries and marketing units around the world. With
annual total revenues of more than US$29.9 billion (consolidated), LG
Electronics comprises three main business companies: Digital Display
& Media, Digital Appliance and Telecommunication Equipment &
The LG Digital Display & Media Company provides core technologies
for cutting-edge digital products and is a world leader in digital
display products including plasma TVs, LCD TVs and monitors, and
digital high-definition televisions (HDTV). The Digital Display &
Media Company also provides digitally integrated products such as AV
systems, optical storage, set-top boxes and home servers and is
focusing on next-generation businesses such as home and mobile
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