South Korea's LG Electronics reported a record quarterly loss on Wednesday, as its phone business remained weak and its TV division also lost money, hurt by steep price declines in television.

After a big underperformance, shares in LG, which trails Nokia and Samsung in handsets, have jumped by a third from their lows in November versus a 10 percent gain in the KOSPI.

By 0432 GMT, the stock traded up 0.4 percent after falling as much as 4 percent on Wednesday, as results showed losses from handset sales narrowed.

Founding family scion Koo Bon-joon, who took over as the CEO in October, is hoping to turn around LG's fortunes with its premium Optimus smartphone models, taking on Apple and Samsung Electronics.

LG's been not doing very good in the smartphone segment... and many vendors are introducing new smartphones and you will see handset prices keep falling, said Kevin Chung, an analyst at JIH SUN Investment Consulting.

On the TV side, we still count on demand from China before the Lunar New Year there and if demand for its TVs and mobile phones can pick up, perhaps the company can return to profits in the second or third quarters at the earliest.

LG's late entry into the high-end smartphone market, half-a-year after Apple introduced the iPhone 4 and Samsung unveiled Galaxy S, means LG's phone business may remain in the red in the first half of 2011, analysts said.

Weaker-than-expected consumer demand for TVs and price competition from the likes of Sony and Panasonic are also hitting LG, the world's No.2 TV brand after Samsung.

LG, also the world's No.3 handset vendor, reported October-December operating loss of 246 billion won ($219.8 million), its second consecutive record quarterly loss and worse than a consensus forecast of a 165 billion won loss polled by Thomson Reuters I/B/E/S.

According to Starmine SmartEstimates, which places more weight on recent forecasts by top rated analysts, LG was expected to report a record 336 billion won loss in the quarter.

The loss compares with a 114 billion won profit a year ago and a 185 billion won loss in the preceding quarter.

LG is the first major Asian electronics firm to report quarterly results and may take a more cautious view on the outlook compared with its key rivals, due to costs related to legacy phone models and heavy marketing expenses to boost sales.

Samsung unveils results on Friday. Nokia's shares fell 3.5 percent on Tuesday on market worries that the world's top cellphone maker by volume may issue a profit warning when it reports earnings on Thursday.

LG reported a 262 billion won loss from handset sales, with margins improving to negative 7.7 percent from negative 10.2 percent in the third quarter.

An improved global economic growth forecast of 4.4 percent for this year by the International Monetary Fund will benefit exporters such as LG, which generates around 90 percent of its revenue overseas.

LG Electronics proposed a 200 won per share for year-end dividend.

($1=1121.6 Won)

(Additional reporting by Jungyoun Park and Baker Li in TAIPEI; Editing by Dhara Ranasinghe and Anshuman Daga)

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