(Updates with closing share price in sixth paragraph.)
July 27 (Bloomberg) -- LG Electronics Inc., the world’s third-largest maker of mobile phones, climbed in Seoul trading after the company reported a narrower loss than analysts estimated at the wireless division.
The mobile-phone division had a loss of 53.9 billion won ($51 million) in the three months ended in June, compared with a median estimate for a loss of 80.2 billion won in a Bloomberg News survey of six analysts. That helped total operating profit rise 25 percent to 158.2 billion won, exceeding the 118 billion won average of 8 analyst estimates compiled in the past month.
The shares rose as much as 3.8 percent as the results helped ease concern about the company’s shrinking share in the mobile-phone market, with consumers flocking to devices from Apple Inc. and Samsung Electronics Co. South Korea’s second- biggest electronics maker is seeking to win back customers with its Optimus smartphones based on Google Inc.’s Android system, including a model capable of recording and showing 3-D images.
“Their losses from mobile phones continue to narrow,” Kwon Sung Ryul, an analyst at Dongbu Securities Co. in Seoul said. “We’re paying attention to the structural change in their smartphone business.”
It was the smallest of the five consecutive quarterly losses at the mobile-phone division, according to the company.
LG rose 2.6 percent to 83,800 won on the Korea Exchange at the 3 p.m. close in Seoul. The stock earlier had its biggest intraday jump since June 21.
Second-quarter net income fell 87 percent to 108.4 billion won after the LG Display Co. unit reported a 96 percent plunge in profit. That lagged behind analysts’ estimate for 198.5 billion won.
In November, the Optimus One became LG’s first smartphone to sell more than 1 million units, about 40 days after its debut, the company said. LG in February unveiled the LG Optimus 3D smartphone capable of recording 3-D images, a feature the iPhone and Galaxy devices don’t offer.
The market for 3-D phones and handsets capable of running on faster fourth-generation networks will likely expand in the third quarter, LG said today. LG expects the 3-D handset to sell 1.7 million units by the end of the year, helping it sell 24 million smartphones this year, Park Jong Seok, head of the mobile business said on July 7.
The company wants to differentiate itself with good hardware such as the 3-D model by taking advantage of features it is strong at, such as displays, he said at the time.
LG’s share in the global mobile-phone market declined to 5.6 percent in the first quarter from 7.6 percent a year earlier, Gartner Inc. said on May 19.
To turn around the business, LG Chief Executive Officer Koo Bon Joon, Group Chairman Koo Bon Moo’s younger brother, replaced the head of the mobile business with Park in October.
LG will continue to reduce output of cheaper basic handsets to focus on high-end smartphones even if that leads to a decline in overall handset shipments, Chief Financial Officer David Jung said at a briefing in Seoul today.
The shift and seasonally weak demand for air conditioners after summer mean the company’s overall sales and profit will likely decline in the third quarter from the previous three- month period, he said.
The home-entertainment division, which makes TVs, had an operating profit of 90.3 billion won, compared with a loss of 25.8 billion won a year earlier. The median of the six analyst estimates was for a profit of 103.5 billion won. Sales fell 5.4 percent.
LG is seeking to increase sales of 3-D TVs using a technology called Film Patterned Retarder, or FPR, an alternative to the shuttered-glasses approach used by its rivals including Samsung. LG says its polarized glasses are lighter and more comfortable to wear, with less eye strain.
The company aims to boost its TV market share to 16 percent this year from about 12 percent in 2010 with new models, Havis Kwon, head of the business, said in February.
An industry-wide slump in TV demand won’t likely recover at least until early next year, James Jeong, chief financial officer of LG Display, said on July 21.
The home-appliance division had an operating profit of 50.7 billion won, dropping from 185.1 billion won a year earlier. That compares with the 48 billion won median of the six analysts’ estimates. The drop in profit stems from rising raw material costs and increasing competition, the company said.
The air-conditioner business also posted a 26 percent fall in operating profit, LG said.
--Editors: Anand Krishnamoorthy, Subramaniam Sharma.
To contact the reporter on this story: Jun Yang in Seoul at firstname.lastname@example.org
To contact the editor responsible for this story: Young-Sam Cho at email@example.com.