Message from the CEO

Dear Shareholders, Consumers, Business Partners, and Employees:

"CREATING GREATER VALUE FOR EVERY STAKEHOLDER IS OUR ONE AND ONLY GOAL"

The volatility and uncertainty in the financial markets are unprecedented. Never before in LG Electronics’ history have we witnessed such rapid deterioration and retrenchment in major markets. However, regardless of whether or not countries emerge from recession in 2009 or 2010 or even 2011, we will take a longer-term view of our priorities. I believe that we need to stay even more focused on the six strategic pillars laid out before to guide our innovation.

These pillars are as follows: 1) Enhance Performance Management, with a balanced emphasis on growth and ROIC, 2) Restructure our business portfolio for profitable growth, 3) Align our product market strategies against clear customer insights, 4) Invest in building a global brand, 5) Emphasize design, as well as product innovation, and 6) Globalize our organization and processes.

While we are determined to press ahead with these initiatives, our primary focus has, as always, been the overall health of our businesses rather than mere short-term performance. That is why we pay such close attention to the health of our product pipeline, channel collaborations, consumer relationships, business portfolios, brands, organization, and finances.

These careful and conscientious operational strategies consistently resulted in a number of dramatic operational adjustments and took concrete steps to respond to the economic environment. LG Electronics sharpened its focus on maintaining and building profitability, backed by a dedicated staff with the talent, commitment, and desire to serve customers in every way. In the past two years, we’ve had record-breaking performances in terms of both revenues and profitability, while our stock price also outperforms that of most of our peers.

But more important than congratulating this impressive performance, we will keep our efforts to make significant strides to improve the underlying health of our business. Those strategic pillars are not just “slogans,” subject to the latest management trends. Instead, I believe that these serve as “anchors” for us to tailor our actions even more relevant in these uncertain economic times. With the six “anchors” still guiding our direction, we believe that we need to set our sights on a few broad themes.

SHIFTING CONSUMER SEGMENT LANDSCAPE

We see that our consumers are changing more “value oriented” in this middle of a historic period in the world economy. In this environment, we need to be extremely proactive in our consumer insights activity to monitor changes in consumer need and behaviors. There will be a clear re-sizing of segments, shifts in needs, and as such, a change in the ‘sweet spot’for us to target. The shifting consumer ‘sweet spot’ will require better focus, flexibility, and differentiation in product road map. Doing so will positively impact not only our top line, but also our working capital and ROIC. And this also gives for us an opportunity to redefine the partnership with the leading partners, so that we all emerge from the economic downturn as stronger players.

IMPROVING OPERATIONAL FLEXIBILITY

We need as much operational excellence in our cost base, SCM and pricing as possible, in order to weather though the turbulence. Every opportunity to improve our overhead cost position, improve margins, and free up cash, should be examined. The best SCM capabilities to improve LG Electronics’ reliability, flexibility, and our response time are needed if we are going to be able to work in a much tighter inventory environment. In the meantime, the margin flexibility, as well as product pricing strategies, is needed if we are going to quickly respond to shifting consumer landscape.

REDOUBLING EFFORTS TO RESTRUCTURE PORTFOLIO

The current environment could provide a unique window of in-organic opportunities. Each of us has made a progress to layout our strategies to restructure the business portfolio for future profitable growth. LG Electronics’ business portfolio, which was restructured in January 2009, is now comprised of five business companies-Home Entertainment, Mobile Communications, Home Appliance, Air Conditioning, and Business Solutions. This structure will allow us to capture even more of the ever-expanding commercial market. It will also help us expand our value chain from hardware to solutions and enable the company to better address the lifestyle needs of both current and future consumers.

Armed with a host of future-oriented products and technologies, future-focused business strategies, and strong branding and marketing activities, LG Electronics is well-positioned for repeated and sustainable growth and success. We are also seeking to become a global “top 1” electronics and telecommunications company and an “innovation company”with solutions that can change the landscape of the markets. The ultimate goal of these strategies is to add to the values of our employees, customers, shareholders?and you.

I look forward to your continuing interest, support, and encouragement on LG Electronics.

Thank you.

Yong Nam, Vice Chairman & CEO