LG Electronics has admitted it will not be able to stem losses from its handset division in the current second quarter. “It’s impossible [for the handset operations] to turn around [in the second quarter],” the company’s chief executive Koo Bon-joon told reporters yesterday. LG’s share price is headed for the lowest closing level since March 2009. The stock dropped as much as 3.4 percent earlier in the trading session. At least four brokerages including Shinhan Financial Group and Kiwoom Securities predicted in April and May that the mobile-phone division would post a second-quarter profit.

Although LG is the world’s third-largest handset vendor, its market share is slipping. According to Gartner, its share of the device market fell from 7.6 percent in Q1 2010 to 5.6 percent in Q1 2011. LG reported an unimpressive performance in its mobile activities in the first quarter of 2011 with a 10 percent decrease in shipments year-on-year to 24.5 million units taking its toll on both total company sales and profits – the quarter marked the fourth consecutive operating loss from the handset unit. In the three months, it reported an operating loss of KRW101 billion (US$93.5 million) from handsets, compared to a Q1 2010 profit of KRW28 billion, on sales of KRW2.85 trillion, down from KRW3.14 trillion. It expects to improve its product mix by launching new devices such as the Optimus Black and the Optimus 3G, as well as further cutting its costs, in the coming months. However, the South Korean vendor also noted last quarter that “competition is expected to intensify with competitors launching new smartphone models along with handset makers striving for growth.”