Moody's Investors Service said Thursday that it has cut its outlook on LG Electronics Inc. to negative from stable, citing its loss-making mobile business and global economic slowdown.
The move deals another blow to LG Electronics, the world's third-largest maker of mobile phones, which is trying to stay relevant in the smartphone race. Its mobile division posted a fifth-consecutive loss in the second quarter.
LG's competitive position in the handset business has considerably weakened, the Hong-Kong based rating agency said in a release. Improving performance in its other businesses, such as TVs and home appliances, is also a challenge for the Korean firm given the growing uncertainties in the world economy, it added.
"(LG Electronics) will rely on the adoption of LTE (Long Term Evolution) smartphones and further gains in its 3D TV market share to restore profitability. But the achievement of both carries significant execution risk," said Annalisa DiChiara, a vice president and senior analyst at Moody's.
LG Electronics, which rolled out its premium smartphone model months after rivals like Samsung Electronics Co. and HTC Corp.
launched their high-end smartphones. It announced this week a new LTE phone for the high-speed network.
The uncertain economic outlook have pushed consumers to delay their TV purchases, also boding ill for the firm and its affiliate.
Largely due to the reduced TV orders, LG Display Co. posted operating losses in the past three quarters, hurting the bottom line of LG Electronics, which owns a 38-percent stake in the world's second-biggest supplier of liquid crystal display (LCD) panels.
(Yonhap News)
