LG Display Struggles for Footing After LCD Forecasting Error Leads to Crisis

LG Display Struggles for Footing After LCD Forecasting Error Leads to Crisis

The chief executive of South Korea’s LG Display, Han Sang-beom, was determined to deliver a strong message when he appeared before 1,000 employees at the firm’s main manufacturing plant last spring.

So he donned a pair of goggles, picked up a hammer, and smashed a liquid-crystal display screen to bits.

The symbolism was impossible to miss: LCD panels, the company’s mainstay for years, were being relegated to the industrial dustbin. The company’s future would depend on a newer technology, organic light-emitting diode, or OLED.

“I’ve never seen him do such a thing,” said one company official who was present. “His performance showed a grim determination to weather this crisis.”

Yet LG Display’s predicament was in many ways one of its own making. Less than a year earlier, the company had showered employees with perks and bonuses as profits rolled in, driven by the company’s leadership in LCD screens for TVs, computer monitors and smartphones.

But LG Display had misread the market: Chinese competitors were coming on strong, and by early this year prices for LCD screens were plummeting. The fat profits of 2017 turned into big losses in 2018 – and the company abruptly announced in July that it would slash $2.7 billion in capital spending it had planned through 2020.

It did not reveal its total or previous targets but made about $6 billion in capital expenditures in 2017, according to Eikon data.

The company’s troubles stand as a stark example of the risks inherent in hotly competitive technology businesses that require massive capital investment.

“It seems that LG Display made a major miscalculation on its LCD business, not accurately judging the timing to pull away when they could see China’s rapid catch-up,” said Lee Won-sik, an analyst at Shinyoung Securities.

“We knew from last year LCD prices would go down but we did not expect this big and fast fall,” acknowledged one LG Display official, who, like others in this article, declined to be identified because he was not authorised to speak to the media. “Customers had been asking for price cuts, but we didn’t act until it got too late.”

Prices in free fall

LG Display posted five straight years of strong profits after Han took the helm in 2012, riding a tide of LCD screen orders from Apple and strong demand for both phone and TV screens from LG Electronics, which owns more than a third of the display-maker.

LG Display also began to invest in OLED displays, which unlike LCD screens don’t require backlighting and can deliver more natural-looking colours. OLED screens also consume less energy and can be bent and folded.

But the technology is expensive, and LG Display was earning the vast majority of its revenue from LCDs. Until its recent cutbacks, it was running eight LCD production lines in South Korea and another in China.

While LG Display hummed along, Chinese companies, led by BOE Technology Group, were pouring huge sums into LCD production.

By January 2017, BOE had become the No. 1 supplier of LCDs larger than 9 inches, according to market tracker IHS Markit, taking 22.3 percent of unit shipments versus 21.6 percent for LG Display. It was the first time a Chinese display maker had taken the top spot.

By early 2018, prices for many types of LCDs were in free-fall. Prices for 50-inch LCD television panels, for example, slid 32 percent in August versus the same month last year, according to IHS Markit.

LG Display’s big South Korean rival, the display unit of Samsung Electronics, had begun pulling back from LCD years earlier, shutting down older LCD production lines in South Korea beginning in 2010, according to a Samsung Display official. The company now has just two LCD factories in South Korea and one in China.

But LG Display was caught flat-footed and is now furiously slashing LCD capacity. It has closed three LCD production lines since last year and abandoned plans for a new one.

The company in April also rolled out an “emergency management system,” with employees being told to use cheaper flights and cut back on group meals, company sources told Reuters. Cash flow has become a concern: it was negative 838.2 billion won ($743.93 million) in the second quarter, according to Eikon data, and has been negative for three straight quarters.

Three company sources say the company is not planning layoffs for fear of losing talent to China, but some employees are frustrated with cuts in benefits.

“Executives are trying to keep the morale up, telling us media reports about a voluntary redundancy program are false,” a company source with knowledge of the matter said.

OLED a game changer?

LG Display is now betting the house on OLED, and says it can fund $17.6 billion in OLED investments over the next three years. It expects the newer technology to account for 40 percent of revenue by 2020, up from just 10 percent today.

As OLED becomes more prevalent, LG Display’s fortunes could turn, analysts say.

LG Display’s OLED panels have helped its sibling, LG Electronics, take the lead in high-end televisions. Some analysts believe LG Display has been pressured to supply those panels cheaply, hurting its profitability, though the company denies that is the case.

But the OLED market promises to be tough. Samsung boasts that it has been investing in OLED since 2005. BOE is getting into OLED too. There are also still technical challenges in making large-panel OLED TV screens that don’t wear out too quickly, noted Ross Young, CEO of research provider Display Supply Chain Consultants.

Son Young-jun, LG Display’s vice president of public relations, said in a statement that the company is the only producer of large-size OLED displays and had “unmatched technological expertise” in OLED. “The potential and outlook ahead is promising,” he said.

LG Display says its OLED division will turn a profit in the third quarter. It also expects LCD prices to stabilise, enabling it to squeeze profits from the older technology until the newer one matures.

“Given OLED is our answer and solution to the crisis, there’s nothing else we can do other than tightening our belts and pushing for OLED,” a company official said.

[“Source-gadgets.ndtv”]

iPhones Grow in Popularity, But Android Platform Still Leads

smartphone makers

Apple continues to lead the pack in the U.S. as a smartphone make.   To iPhone users, that’s probably not a surprise.  iPhone users tend to be loyal fans.

More than 39 percent of mobile subscribers in the 3 month average ending April used Apple smartphones, comScore reports. That’s more than any other smartphone maker.

And popularity is growing.  April’s figures are a 1.4 percent increase over Apple’s share of the market as measured in January. The company’s market share in this category actually increased by nearly a full percentage point over its closest competitor, Samsung.

Here is how the rest of the smartphone market breaks down:

Samsung was next, with 22 percent of the market, up just over half a percentage point since January. These figures could change in favor of Samsung if the company sees customers confidently buying its Galaxy S4 smartphone or its competitively priced Galaxy S4 Mini (when it’s released).

Phone makes HTC (9.7%), Motorola (8.6%), and LG (7%) follow.

Android Leads, If Measured By Operating Platform

If you count by operating platforms — instead of phone makers — the story is different.

Google’s Android continues to dominate in the smartphone operating system market. This market is measured by the number of subscribers using the Android operating system, versus a particular make of phone.

According to comScore’s MobiLens service, over half of the 138.5 million smartphone users in the U.S. have phones running Google’s Android platform. But Android’s lead among operating systems decreased nearly two full percentage points from January to April.

Apple’s iOS, of course, is next at 39% and saw a 1.4 percent increase as mentioned above.

BlackBerry and Windows phones’ market shares each dropped a bit, less than a percentage point over the same period, according to the MobiLens survey.

MobiLens gets its information from a nationwide sample of smartphone subscribers over the age of 13. Only primary mobile phone numbers are used to collect data.

Shutterstock, smartphone

[“source-smallbiztrends”]

5 Signs You’re Throwing Leads in the Trash

business trashWhat I’ve learned the last 10 years of working with entrepreneurial small businesses is that this savvy group of marketers cares about three things: getting more customers, increasing sales and saving time.

Small businesses tend to focus most, if not all, of their marketing and sales resources on closing hot leads — which means the not-ready-to-buy-yet leads end up getting thrown out with yesterday’s garbage.

This “get more customers now” mentality, combined with a lack of time and resources, hurts small businesses and often causes some serious inefficiency in the marketing and sales funnel.

Are you suffering from this problem in your small business? There are five signs your marketing and sales funnel is leaking leads and losing customers.

 

1.       You don’t use a lead magnet or Web form. You spend money and time driving traffic to your website, but then you bury your opt-in form. Or worse, you don’t offer a compelling lead magnet (e-book, webinar, demo, etc.) that people can opt in for at all. If you don’t have their contact information, you can’t follow up, and your conversions will be lower.

2.       You don’t segment your prospect and customer list. I suggest you segment your contact list three ways: by lead source, by demographics and behaviors (links they clicked on in an email, webinars they attended, etc.) and by selected interests (what information they’ve opted to receive).

3.       You don’t have a lead nurturing system in place. Without a system in place for nurturing and qualifying cold leads, your sales team waste hours on the phone educating prospects about the benefits your product or service provides. It helps to have an automated follow-up system in place so no lead gets lost in the cracks.

4.       You batch and blast. Your lack of time forces you to send the same message at the same time to your entire contact list. While your prospects and customers may share similarities, this one-size-fits-all approach will train them to ignore you or opt out of your messages all together. Track what actions they’ve taken, what information they’ve opted in to receive and their buying history. Then send only relevant, highly targeted messages that you know they will want to receive. This strategy will result in better open rates, higher click-through rates and more lead-to-sale conversions.

5.       Any nurturing ends after the sale. Once you get the customer, you get too busy to keep them happy, to upsell additional products or to ask for referrals. Automated follow-up can help satisfied customers remember to send their friends your way. Also be strategic about the products you upsell. If you have a system in place for tracking customer behavior, you can easily market your upsells to their needs. I know one small business that sends a pre-recorded voicemail automatically to new customers, thanking them for their recent purchase. That same business sends cookies when customers spend a certain amount of money (this is done automatically when the sale is processed). It’s about wowing your new customers so they don’t leave you for the competition.

Don’t fret if you find your marketing and sales funnel has some serious leaks. Just about every small business will experience and overcome these growing pains. In today’s world of technology, there are many marketing and sales tools available to help small businesses attract, nurture and convert leads.

[“source-smallbiztrends”]

China Leads in Digital Payment Adoption Worldwide: Nielsen

China Leads in Digital Payment Adoption Worldwide: Nielsen

China has the highest adoption rate in the world for technology-enabled payment systems, the media reported on Thursday.

In a survey of 13,000 respondents in 26 countries, 86 percent of Chinese respondents said they paid for online purchases during the past six months via digital payment systems compared with a global average of just 43 percent, the China Daily reported.

The survey report by the market research firm Nielsen was issued on Wednesday

About 98 percent of the respondents in China, the world’s largest e-commerce market, said they had made purchases online.

At 71 percent, food-related businesses topped the list of purchases made via smartphones while event ticket purchases stood at 51 percent.

The rising use of digital payments has attracted numerous players to the Chinese market.

Apple Inc launched its contactless payment system Apple Pay in the Chinese mainland last month. It allows users of the iPhone 6 or more advanced versions, certain iPads and Apple Watches to pay by their devices in bricks-and-mortar stores.

The new service immediately became a hit.

Samsung Electronics Co Ltd is expected to bring its own mobile payment service to China in mid-March.

China’s Internet giants Alibaba Group Holding Ltd and Tencent Holdings Ltd have already taken about 90 percent of the mobile payment market, but industry observers said the competition is just about to start.

Download the Gadgets 360 app for Android and iOS to stay up to date with the latest tech news, product reviews, and exclusive deals on the popular mobiles.

Tags: Apple, Apple Pay, China, Internet, iPhone 6, Samsung, Samsung Pay
[“Source-Gadgets”]