South Korea's LG Electronics hasn't been so smart with its smartphone business. Its mobile phone division has suffered five consecutive quarterly losses, cutthroat competition is pressuring it to overhaul the business and its shares have plummeted.
The money-losing phone unit has also been a major value destroyer for LG shareholders. LG's market value is only $7.5 billion, roughly one-third that of global rivals HTC Corp and Nokia, even though it also has sizeable TV and home appliances divisions.
LG's handset division is the company's biggest capital sinkhole and the shares have more than halved this year, making it the worst performer even when compared to HTC and Nokia.
"Selling the loss-making business is probably what investors want," said Harrison Cho, an analyst at KB Investment & Securities. "But even with that option, LG wouldn't get much from the sale. They should have sold it long ago before the overall landscape got tougher."
"They simply missed the boat," said Cho.
Setting up ventures with the likes of Philips and Nortel to share risks is what LG has done in the past in flat-screens and telecom gear. But analysts say there may not be many potential partners keen to team up with the loss-making mobile phone business.
The changing of the guard at Apple Inc could offer opportunities for rivals to chip away at the technology powerhouses's strongholds in some sectors, but on a standalone basis, LG is limited by its scale of operations in smartphones.
The world's No.3 mobile phone maker has already cut this year's smartphone sales target by 20 percent to 24 million units and has given no outlook for when the business will turn profitable.
LG's Android-based smartphones are marketed under the Optimus brand and sales of such models as Optimus 2X and Optimus 3D have been solid, although nothing like the Galaxy and iPhone.
Koo Bon-joon, a member of LG's founding family, took over as CEO of the group's flagship firm in October and is cutting the portion of unprofitable feature phones and shifting focus to high-margin smartphones.
But the rapidly changing industry landscape has more bad news in store for LG. Nokia has dumped its mobile platform and tied up with Microsoft to survive, while Motorola Mobility is selling itself to Google to become a handset manufacturer for the search giant.
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