[This story was written originally for ZDNet on October 15, 2015 reporting from Seoul, South Korea.]
LG could join an already global market crowded by big players such as Google’s Android Pay, Apple Pay and Samsung Pay, perhaps as early as November, according to South Korean media reports.
The trademark application revealed alternative names for the new mobile payment business, eight in all, including “G Pay”, “L-Pay”, and “LG Pay”. Samsung filed a similar trademark application one month before it launched Samsung Pay.
LG has been reportedly studying the mobile payment market for some time now. It conducted pilot tests, issued reports, and is said to have even set ambitious sales targets.
LG could use the same NFC technology employed in Google’s Android Pay and Apple’s Apple Pay to connect the cash register to the mobile or wearable device, jumping on the bandwagon of support for contactless payment in the US and Europe.
But introducing the mobile payment service without some software or business innovation — as Samsung did with magnetic secure transmission (MST), which allows users to connect with older credit card terminals — LG might be perceived as a Johnny-come-lately, glomming onto a service its successful cross-town rival Samsung already provides.
It is unclear how LG intends to differentiate LG Pay, or even if it can.
LG was unavailable for comment.
ESTIMATES DIM FOR LG’S THIRD QUARTER RESULTS
Don’t expect any miracles from LG Electronics’ smartphones and its mobile communications division when the mobile device maker announces its third quarter results at the end of this month, according to a Seoul-based investment firm.
Eugene Investment & Securities gave a “hold” recommendation for traders of LG stock, setting a target price of 53,000 won. LG closed on Monday at 47,150 up 150 won, or 0.32 of a percentage point. Eugene projected a price-to-book ratio (P/B ratio) of 1.0, saying it is doubtful LG can muster any surprises with its mobile communication division.
Eugene Investments calculated LG’s P/B ratio at 0.7 based on its performance so far this year, including what it expects to be an underwhelming third quarter, and a stock price target of 50,000 won, adding that since the investment company does not expect LG to muster any surprises out of its “super-premium” V10 smartphone, it calculates LG’s P/B at an even 1.0.
A P/B ratio of less than 1.0 can indicate that a stock is undervalued, while a ratio of greater than 1.0 may indicate that a stock is overvalued. But any determination of a P/E ratio depends on the company’s fundamentals, the industry it’s in, and the formula used to calculate a P/E ratio.
LG has been suffering a prolonged slump in its smartphone business in the face of increased competition, which is forcing it to sharply cut the price of its high-end smartphones.
LG’s mobile communications business, including smartphones, posted 3.6 trillion won in revenues in the second quarter, nearly flat from a year earlier. Its operating profits, however, nosedived to 200 million won, making almost naught per unit sold.
LG is scheduled to report its third quarter results on October 29.
Eugene estimates LG Electronics’ third quarter results at 14.16 trillion won in revenue and 3.087 billion won in operating profits year-on-year, according to figures provided by Eugene Securities. LG Innotek, which supplies camera modules to Apple, is estimated to pull in 12.99 trillion won in revenue and 2.5 billion won in profits.
LG stock dipped to the psychologically dangerous 40,000 won level in late August, amid concerns over the performance of its TV division. It gained ground in September, but now the market has its eyes focused on the strength of its consumer electronics division.
LG FORCED TO COMPENSATE FORMER EMPLOYEE FOR LTE PATENT
A court in Seoul has found that LG Electronics did not properly compensate one of its researchers for an international patent.
A civil high court in Seoul ruled on Sunday that LG Electronics must compensate a researcher identified by the surname Lee, who worked at LG for four years, a sum of 199.5 million won ($166,500) for a number of international patents.
In 2008, Lee filed an LTE technology-related IP through a senior researcher at the 4G standardisation team in LG’s Mobile Technology Research Institute.
According to the application for the IP, which was filed in 2008, a senior researcher and Lee were listed as the inventors and LG received rights to use the technology from them.
The invention was significant to LG’s business, the court said in its determination. The IP was included as part of the International Standardization Organization’s 3GPP LTE standardisation for all mobile communication.
In 2010, LG transferred 9.5 billion won ($7.916 million) to Pantech, which explicitly listed IPs — including Lee’s — valued at 6.65 billion won.
LG Electronics has already paid out 63 million won ($53,000) in compensation to another researcher, identified as A, for violating international patents filed in the former employee’s name in accordance with the recommendation of a court-established inquiry committee.
The court also ordered LG to list Lee as a co-inventor of the technology on all applications and other corporate documentation related to it, but the researcher identified as A said that Lee is entitled to 2.85 billion won ($2.375 million) in compensation, 30 percent of the IP transfer payments totalling $7.916 million.
The court also ordered LG to officially acknowledge the contributions made by Lee’s invention.
The idea for the invention began with an email to researchers in 2007, outlining technical aspects that eventually led to its development. It was Lee who shepherded the idea’s further development, did the bulk of the research, and saw its completion.
The high court ruled that Lee and the senior researcher each contributed to the development of the idea in equal amounts, and the two developers contributed 60 percent to the invention.
Despite this, the court determined monetary value at just 5 percent.
The court concluded that “Lee and the senior researcher utilised equipment and other resources of LG, and received assistance from colleagues to develop the idea further. Moreover, the invention was just one part in a myriad of factors contributing to the adoption of LTE technology standards.”