More South Korea IP Communications Stories

Succumbing to an economic slowdown that’s claimed much of the consumer electronics industry already, a South Korean company announced today that it would cut costs by about $2.17 billion this year.

 

Officials at LG Electronics announced no immediate layoffs as they pursue a reorganization, and said that they won’t reduce investment in R&D, branding, design and marketing.

 

According to the company’s chief executive officer, Yong Nam, every company has been affected by this recession.

 

“The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones,” Nam said.

 

In an effort to pick up market share, the company says it’s focusing on areas with longer-term growth potential and profitability.

 

“LG will continue to invest in future growth engines such as solar power, commercial air conditioners and business solutions, all sectors LG expects will expand and become increasingly profitable once the economy is back on track,” Nam said.

 

When that day will come is anybody’s guess. What’s clear is that the consumer electronics market – as evidenced by how hard Intel Corp. has been hit – is struggling to adjust.

 

As TMCnet reported, the world’s largest maker of computer chips began slashing prices on some of its processors as demand for its chips diminished and revenues from the quarter ended Dec. 31 came to $8.2 billion – a 19 percent drop from the prior three-month period. The results include a $1 billion negative impact from a previously announced reduction in the carrying value of the company’s Clearwire investments.

 

Officials at LGE say they’re taking a number of steps to shore the company and navigate the slowdown, including cost reduction, improving standards in the organization and focusing on customer-centric processes.

“These initiatives will enable LG to improve both growth and profitability over the long-term, regardless of the economic climate,” Nam said. “Becoming a stronger global brand will be a natural outcome of this effort.”