SEOUL -- While the recession forces a sharp decline in global sales of mobile phones, LG Electronics Co. is posting some of its strongest growth ever and taking market share from mobile phone rivals.
LG last year passed Motorola Inc. and Sony Ericsson to become the world's third-largest seller of cellphones, shipping just over 100 million units, or about 8.6% of the global 1.17 billion.
This year, with the overall cellphone market expected to fall more than 10%, some analysts predict LG's cellphone shipments will rise between 10% to 20%. The division's growth is expected to help LG post a profit when it reports quarterly results Wednesday at a time that many consumer-electronics companies are struggling with deep losses.
One of the South Korean firm's strategies is a business process in which each product has an individual responsible for it from the moment it moves out of the research lab until its last day on a store shelf.
"In the past, we didn't have people who owned the performance of a product," says Kim Myung-ho, a vice president in LG's cellphone division. "Now that we do, the number of hit phones we have is increasing."
The system allows LG, which introduces about 50 phones a year, to quickly recognize when a model is performing poorly and shorten its product life, something that happened with several camera phones over the past two years.
"If we have 10 phones, perhaps one or two will be hits that sell millions of units, two or three more will make targets and the rest will fail," Mr. Kim says. "If a certain product is not going to be successful, we want to move on."
The system also allows product managers to quickly boost supplies and marketing in areas where a particular phone is selling well. On Monday, LG said a new phone called Cookie -- touch-screen models with colorful cases for younger buyers -- has shipped five million units since its release in November. LG has also been boosted by new versions of its popular Chocolate and Vu phones.
James Kim, an analyst at Nomura International Ltd. in Hong Kong, says LG is experiencing the "strongest momentum" in its history. He forecasts a 6% climb in LG cellphone shipments in the second quarter, with bigger gains in the second half of the year. He expects LG's cellphone revenue in the second quarter to jump 34% to about $4 billion due to an upward shift in average selling price.
By contrast, the industry's leading seller, Nokia Corp., last week said it expected to lose some market share this year. And the second-biggest seller, LG's crosstown rival Samsung Electronics Co., forecasts marginal growth at best.
LG laid the groundwork for its performance about two years ago when then-new Chief Executive Nam Yong restructured the electronics maker so that each item had a product business leader, a position known as a PBL within LG, responsible for it.
The position is now common in all of LG's divisions, including home appliances and consumer electronics, but the work involved in it has been refined in the cellphone business, which introduces the highest volume of products and copes with the widest mix of targets for profitability and time in the market.
"LG is very good at producing models for one geography and tweaking them to meet specific [wireless] carrier needs," says Avi Greengart, an analyst at research firm Current Analysis. "They are extremely responsive."
Seo Hyung-won, the PBL for LG's Viewty touch-screen phone that launched in 2007 and was refreshed last month as Viewty Smart, says he updated the first version's jog-wheel control and the lens cover on its camera after early customers complained about them.
But he also noted some stumbles in the process. Initially, Mr. Seo and his peers frequently traveled to gauge market response to products, which drew complaints from factories and sales offices that the managers were difficult to reach. "The regional offices were sometimes frustrated with absent PBLs," he says. "Now, we try to coordinate trip schedules better."
Driven by the cellphone unit's growth, LG's second-quarter performance is likely to stand out as the consumer-electronics industry slogs through the current downturn. Analysts believe LG will report a profit for the quarter near its year-ago level, when it had its best ever April-June period.
Part of LG's second-quarter success is also timing. LG's appliance division, which accounts for 25% of revenue, is seasonally strongest in the quarter. Both LG and Samsung have been hurt less than rivals in other countries because they benefited from the devaluation of South Korea's currency, which made prices of the goods they shipped out of the country more competitive.
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