Samsung sees LG as third biggest smartphone maker

Look who is betting on LG in the smartphone market! None other than the rival Samsung. Just that it is not Samsung Mobile, but Samsung's financial and investment arm Samsung Securities. According to a report fromSamsung Securities, LG Electronics will emerge as the third largest smartphone manufacturer in 2013. The report says that LG will be able to engineer a turnaround in the first quarter of next year and expects it to consolidate its position behind Samsung Mobile and Apple in the second half of the year. 
In the report, analyst Harrison Cho writes that LG is at the cusp of a turnaround and will gain market across the world by beating the likes of Nokia, HTC and Blackberry maker Research In Motion owing to better quality products, cost effectiveness and expanded sales reach. 

Talking about LG's upcoming products and their prospects, Cho writes in his report: "Domestic sales of the Optimus G are likely to beat expectations, sparking another rally. The phone should hit overseas markets in November, and successors (such as the V2 and GK) should bolster consumer confidence in LGE's products. On balance, we believe its handset business will turn around in 2013." LG is also Samsung Securities' current top pick for the technology sector. 

Talking about the breakthrough strategy for LG in the smartphone market, the report says: "For LGE to achieve a turnaround, Koreans need to first take to the Optimus G. LGE's past hit models have been received well at home first, before being exported to Japan, the US, and Europe. Better-than-expected domestic shipments of the Optimus G would likely be followed by a gradual increase in exports of G series models. LG Uplus promotions helped the Optimus LTE series sell well initially, but the product soon fizzled both domestically and overseas. We believe the Optimus G, however, will sustain strong sales thank to features and design that surpass precursors and rival models." 

The report says LG will trample on the market of competitors like Nokia, RIM and HTC in order to rise. Cho stated: "We believe they have more upside, expecting LGE's: 1) handset division to swing to a profit in 1Q13—we estimate breakeven quarterly sales and smartphone shipments for the unit at KRW2.5t and 8m-9m units, respectively; 2) global smartphone market share to rise from 4.0% in 2012 to 5.8% in 4Q13, at the expense of second-tier players Nokia, Research in Motion, and HTC." 

He further says: "LGE compares favorably with smartphone pioneer HTC (which controlled 6.3% of the market in 2Q) in hardware and operating system compatibility, and should benefit as Nokia (7%) and Research in Motion (5.3%) lose ground in OS competitiveness. Cost competitiveness is key to surviving smartphone hardware competition, and requires an established supply chain and sufficient global coverage to ship 10m smartphones per quarter. LGE is more competitive than Motorola, Sony, and Chinese firms, whose sales exposure is more regionally focused."