Ever since General Electric (GE) revealed plans to put its appliances business on the block May 16, Korea's LG Electronics has been on most everybody's short list as a potential buyer. Best known as the maker of cheap microwave ovens and toasters a decade ago, LG has emerged as the world's No. 3 manufacturer of white goods after Whirlpool (WHR) and 
Electrolux (ELUX). The Maytag deal put Whirlpool out of reach, but LG now could come close to realizing that ambition by acquiring the GE unit. LG's global appliances sales last year of $12.6 billion, when combined with GE's $7 billion or so, would roughly match Whirlpool's $19.4 billion and place it well ahead of Electrolux' $15.6 billion. 
Success in the more mature U.S. market would, of course, be harder to achieve on its own. Still, in the U.S., LG has made remarkable progress in the past four years with its strategic focus on premium segments. The Korean maker has targeted consumers willing to pay a few hundred dollars extra for snazzy designs and high performance. LG's sleek washing machines, for instance, last year commanded a 22.8% share of the market for more expensive front-loading washers priced at up to $2,500.
One area of strength for LG is its relatively high margin in the cut-throat appliances industry. Its operating profit margin of 6.1% last year was slightly higher than that of Whirlpool (just below 6%) and Electrolux (below 5%).
My thought
In spite of these strength, in the situation that the appliance market is going to be saturated and be sharply contested fastly, because Whirlpool has great market share, LG electronics' profit growth might be limited to certain level. The analyst thinks that that level is not far from current level. As we said above, the difference of sales between Whirlpool and LG is too big and it is increasing countinously. To jump above whirlpool, LG should get the great portion of appliance industry of America and emerging market. The only way to do is to take GE. If LG won't, the other competitor will.
resources: http://www.businessweek.com/globalbiz/content/may2008/gb20080529_678095_page_2.htm
Electrolux (ELUX). The Maytag deal put Whirlpool out of reach, but LG now could come close to realizing that ambition by acquiring the GE unit. LG's global appliances sales last year of $12.6 billion, when combined with GE's $7 billion or so, would roughly match Whirlpool's $19.4 billion and place it well ahead of Electrolux' $15.6 billion. 
Success in the more mature U.S. market would, of course, be harder to achieve on its own. Still, in the U.S., LG has made remarkable progress in the past four years with its strategic focus on premium segments. The Korean maker has targeted consumers willing to pay a few hundred dollars extra for snazzy designs and high performance. LG's sleek washing machines, for instance, last year commanded a 22.8% share of the market for more expensive front-loading washers priced at up to $2,500.
One area of strength for LG is its relatively high margin in the cut-throat appliances industry. Its operating profit margin of 6.1% last year was slightly higher than that of Whirlpool (just below 6%) and Electrolux (below 5%).
My thought
In spite of these strength, in the situation that the appliance market is going to be saturated and be sharply contested fastly, because Whirlpool has great market share, LG electronics' profit growth might be limited to certain level. The analyst thinks that that level is not far from current level. As we said above, the difference of sales between Whirlpool and LG is too big and it is increasing countinously. To jump above whirlpool, LG should get the great portion of appliance industry of America and emerging market. The only way to do is to take GE. If LG won't, the other competitor will.
resources: http://www.businessweek.com/globalbiz/content/may2008/gb20080529_678095_page_2.htm
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