LG Selling $945 Million Shares To Keep Smartphone Business Alive

South Korea's LG Electronics is planning on offering a $945 million share issue in-order to fund their struggling smartphone business. Clearly, the overall company was not happy about this and when shareholders found out their stocks would be diluted shares in LG Electronics dipped 14 percent. That 14 percent actually meant a loss of $1 billion in market value.


So why is a share going on in the first place?

LG has seen a losses approaching nearly 1 trillion over the last six consecutive quarters because the company simply has not been able to introduce smartphones that can compete with the likes of Apple Inc and Samsung Electronics Co.

LG's smartphone market share dropped tremendously in the July-September quarter as its Optimus devices powered by Google's Android operating system just couldn't lure away costumers away from competitors. Losses from the handset division have nearly doubled to 140 billion won from the previous quarter.

"The rights offering is aimed at securing ample resources required to improve competitiveness of our core businesses... We'll continue to invest in our core businesses including smartphones, to regain our initiative," LG said in a statement.

LG is going to need to change course fast if they have any chance of making it in the highly competitive yet lucrative smart phone industry. If the company can pull off a pivot and have some devices that truly start to gain traction with consumers they will have a very bright future. Especially, when you consider the global surge in smartphone use.

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