LG has admitted that poor sales of the new LG G5 were partly to blame for the company’s recent corporate restructuring.
A spokesperson for LG has confirmed to TrustedReviews that last week’s decision to shake up the firm’s mobile division was – in part – caused by underwhelming LG G5 sales. However, the spokesperson admitted that the LG G5’s retail performance wasn’t entirely to blame, and that contrary to reports, no senior management were fired.
“This action wasn’t only about G5 sales and no executives were asked to leave LG as part of this realignment,” explained the spokesperson. "The purpose of the realignment is to create an optimised and agile organisation that can deliver greater performance going forward."
The business shake-up first came to our attention after a report from the Korea Times claimed that LG had announced job cuts over the LG G5, with a statement reading: “The purpose of the realignment was intended to keep LG’s handset business running amid challenging market situations”.
The job cuts were reportedly intended to “reduce fixed costs at a critical time when the firm needs to improve profit”.
But an LG spokesperson today told TrustedReviews that some reports “related to the recent managerial changes” were “inaccurate”.
“The evolving management structure is not unusual in our business in today’s competitive smartphone environment,” the spokesperson added. "In a large, complex business like the LG Mobile Communications Company, continuous improvement and fresh, innovating thinking will always be prioritised.”
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. According to Gartner, LG ranked seventh in global smartphone sales for the first quarter of 2016, holding a sub-4% share of the market, behind rivals Samsung, Apple, and Huawei.
Speaking to the Korea Times last week, 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 campaign of its rivals.”
The LG G5 was announced at Mobile World Congress in February this year. It debuted new modular functionality that allowed users to swap out components (like the battery) easier than ever before. But the handset faced stiff competition from the well-received Samsung Galaxy S7 and Apple’s iPhone 6S.
Related: Samsung Galaxy S8
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