South Korea’s LG Electronics is replacing its CEO: according to reports, Nam Yong will be stepping down as LG’s CEO over declining mobile phone sales and difficulties transitioning the company to compete in the global smartphone market. He will be replaced by Koo Bon-joon, a member of LG’s founding family and the younger brother of LG Group board chairman Koo Bon-moo.
LG said Nam offered the board his resignation as a way of taking responsibility for poor financial performance and management. Nam was appointed LG’s CEO in 2007.
The move comes during the same week that the world’s largest mobile handset maker, Nokia, opted to replace its CEO with an executive from Microsoft, largely over the company’s failure to compete in the smartphone market.
LG just announced a high-end Optimus One smartphone based on Google’s Android platform. LG hopes to sell as many as 10 million of Optimus One units globally; however, so far the company has not announced any plans to bring them to North America. To date, LG hasn’t managed to make a smartphone that’s sold more than 1 million units.
LG is the world’s third-largest maker of mobile handsets, but – like Nokia – has largely failed to capitalize on the consumer popularity of high-margin smartphone devices, where companies like RIM and Apple have moved into market-dominating positions. According to Reuters, LG’s mobile unit used to account for about a third of the LG Group’s sales, but in the second quarter of 2010 that figure had slipped to about one quarter. During that same quarter, the mobile unit racked up a loss of over $100 million.