LG Electronics Inc, hoping to tide through a global economic downturn and emerge stronger, wants to keep up spending and unveil new products to boost its North American presence.
From a watchphone reminiscent of James Bond gadgets to a dozen new high-definition TVs, the South Korean tech giant introduced a slew of new products at the Consumer Electronics Show in Las Vegas on Wednesday and vowed to keep developing more to shore up its premium branding.
Michael Ahn, president and chief executive of LG Electronics North America, told Reuters he expects to gain overall market share in 2009, even if revenue growth sputters as the economic slump prompts consumers to put off purchases until prices fall.
"Even though we have a recession now, like everybody, we do not want to reduce our marketing spending and we want to invest more money on R&D and customer service and eco-friendly and environmental issues," Ahn said in an interview.
"It is a hard decision because revenue could be reduced because of the recession and profit will be reduced because of competition. But we want to invest for our future," he said, adding that LG set aside 4 percent of total revenue R&D in 2008.
Still, the company, like its rivals, is scaling back in some areas in the face of a recession of uncertain magnitude and length. But Ahn said he did not expect to have to manage costs through major restructurings, and LG would take advantage of falling material costs.
Like other makers of televisions, mobile phones and other devices, LG faces tough questions about how to navigate the global downturn, weighing shifts in spending and innovation and the need to balance market-share gains with margins.
LG, which competes with Samsung Electronics and Sony Corp globally, unveiled a dozen high-definition TVs on Wednesday in sizes ranging from 19 to 60 inches. That marked a departure from past practice when TV makers competed to see which could make the largest screen.
Experts say sales of flat-panel television sets will hold up this year, but consumers are likelier to buy smaller screens that bring in less revenue for manufacturers. Despite that, Ahn thinks there is a market for quality products.
NORTH AMERICAN FRONTIER
LG has in recent years undergone a campaign to increase market share in the United States, pitting its mobile phones, flat-screen TVs and appliances against giants like Sony, Nokia, and Whirlpool.
Ahn said LG exceeded its goals for 2008, posting record growth in revenue and shipments of mobile phones. Overall, it raked in achieving revenue of $13.2 billion, a 16 percent increase from 2007. Just five years ago, LG's North American revenue was $5.6 billion.
To strengthen its product offering, it announced agreements with burgeoning media firms such as Google Inc's video-sharing site Youtube and Yahoo Inc to stream movies, video and photos to TV sets.
For instance, the deal with YouTube is designed to let users stream millions of Web videos to an LG Blu-ray player for viewing on TVs, bypassing personal computers.
"We can gain market share a bit more this year, even though we don't expect any revenue increase, frankly speaking," Ahn said.
For now, LG hopes to keep pushing cutting-edge products. It touched off a minor sensation in Vegas on Wednesday with its touch-screen GD910, which it called the world's smallest 3G-enabled watch phone. The James Bond-like gadget came with a feature that allows video telephony.
Some of LG's new high-definition TVs, on view at CES, are aimed at customers of movie-rental chain Netflix, who want the convenience of Internet-to-TV movies without the clutter of an additional, external box.
Ahn also said LG may expand its retail footprint by selling its products through mass merchandise clubs like Costco Wholesale Corp.