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LG admits LG G5 ‘failed', jobs cuts incoming – report

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LG has announced job cuts after admitting that the new LG G5 smartphone ‘failed to generate sales’, according to a new report.

The mobile business division of LG Electronics is expected to undergo a “major shake-up”, including the replacement of some executives. That’s according a new report from the Korea Times, which cites the LG G5’s poor retail performance as the cause of the restructuring.

The report attributes the following statement to LG:

“Friday’s announcement is because LG Electronics’ latest flagship G5 smartphone failed to generate sales. The purpose of the realignment was intended to keep LG’s handset business running amid challenging market situations.”

lg g5

LG reportedly hopes to give its mobile business “new momentum”, and has named Kim Hyung-jeong, a Senior VP at LG, as head of the company’s mobile research lab. The company is also allegedly planning job cuts to “reduce fixed costs at a critical time when the firm needs to improve profit”.

LG’s mobile division has posted an operating loss for three quarters in a row, which is piling pressure on the South Korean tech giant. The company’s statement continued:

The smartphone marketplace is expected to be increasingly competitive in 2016 due to anticipated premium models from competitors and further price competition within the mass tier space.”

According to Garner, LG ranked seventh in global smartphone sales for the first quarter of 2016, holding a sub-4% share of the market. Samsung took first position, followed by Apple in second, and Huawei in third.

LG G5

Speaking to the Korea Times, Cho Jin-ho, Mirae Asset Securities analyst, said:

“The estimated G5 shipment for the second quarter of this year will remain 2.2 million, below a previous expectation of some 3 million. This is because the G5’s market response is getting weaker and the company failed to compete with the aggressive promotion campaigns of its rivals."

The LG G5 was announced at Mobile World Congress in February this year. It boasted a new modular feature that allows users to swap out components – like the battery – easier than ever before. But the handset has faced stiff competition from the well-received Samsung Galaxy S7 and Apple's iPhone 6S.

We've asked LG for comment on this report.

Related: Samsung Galaxy S8

Watch our LG G5 video review:

What do you think of the LG G5? Let us know in the comments.

Jordan

July 5, 2016, 11:50 am

It was a silly gamble, IMO, to make on their flagship model in an extremely competitive market segment.

If they really wanted to try it they should have made a (slightly cheaper?), fixed version to sit alongside the modular unit, like Samsung do with the Edge and non-Edge versions. And it's not just with the benefit of hindsight, as an G4 owner I sighed inside when I saw the original announcement.

I bet most of the people who are facing job cuts could probably have told you that the modular part would make this a guaranteed flop from the beginning, as it overshadow the other worthwhile selling points.

nys299

July 6, 2016, 1:02 am

After seeing how well implemented and sleek the new Moto Z's modular aspect was, LG's implementation looked like a joke. In between the difficulty to slide out the bottom and shops permanently refusing to allow the bottom to be slid open for fear of theft, LG lost the only gimmick of theirs to shine in shops. Also not forgetting that it has been a while already and it is still the same 4 mods available with nothing else in the pipeline. Between this and the Moto Z Force, I know where my money is going to. Can't wait for the Z to be released in my country.

nys299

July 6, 2016, 1:07 am

Actually it's the implantation of modular part that was underwhelming and not the idea. See how (almost) perfect moto z is implemented.

Michael Garry

July 6, 2016, 5:34 am

The G2 and the G4 were both great phones, the G2 at a good price as well. The G3 not so much and the G5 is incredibly underwhelming. If they'd just stuck to the dual cameras and not wasted so much time and money on the modular bit that was obviously under-cooked it would have been a much better, and probably cheaper, phone.

Filip

August 15, 2016, 8:54 am

It's ugly as hell. No surprise.

Apfail

August 15, 2016, 9:42 am

Now the price has dropped to around £170 less than an S7, this truly is a bargain device

charged99

December 2, 2016, 5:57 am

The problem with LG is the customer service I owned the G3 it has to be replaced 5 times then I bought the G4 giving LG a 2nd chance and this phone was 10x better than the G3 yet when it defect LG under the manufactures warranty I turned my phone on for 3 weeks got it back and they made 0 repair. They claimed there was no issue... so I sold my phone for next to nothing.. LG has the absolute worst customer service you can't even buy a extra battery because they are never in stock (6 months the 64 was out of stock of batteries) LG did this to themselves they can poop gold and still no one would want to buy there phones. They just don't get it

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