Grim results and further restructuring expected at Motorola
Published: 3 February, 2009
Motorola reports its quarterly results today - the last of the handset majors to do so, and generally expected to announce the most depressing figures, though these certainly won't be an unpleasant shock like Nokia's. If the Q4 results are dragged down as far as many analysts expect by the suffering handset unit, further restructuring plans, or even revived plans to sell off the devices business, may be announced.
The company had intended to spin off its handset division, which has been impacting negatively for well over a year on the relatively healthy networks and enterprise businesses. However, this plan was cancelled last fall and a radical cutbacks program instituted instead, with the phones business focusing on a make-or-break Android launch later this year. However, the sharp reduction in cellphone development, which has cut Motorola's new product range for 2009 to a skeleton, may have gone too far, leaving the firm uncompetitive against the broad ranges of Nokia and the Korean giants, and, after 4,000 layoffs, with insufficient manpower to carry out its turnaround program.
A research note from Global Crown Capital Equity Research said: "We observe that the sharp cost reduction measures, gutting product development and sales/marketing, are now threatening the long term viability of Motorola's handset operations." Analysts Tero Kuittinen and Pablo Perez-Fernandez believe the company is unlikely to be able to rescue or spin off its phones division, and that moderate margin erosion at the other two units, combined with the "tailspin of the handset unit", puts the company "in a precarious position".
It seems Motorola is cutting back even in areas identified by co-CEO Sanjay Jha as important centers of recovery - such as Windows enterprise phones and Latin America. The company denies it has dumped Windows Mobile as well as Symbian from its smartphone agenda, despite the recent loss of a large part of the Windows team. "We continue to support Windows Mobile and will have devices out this year," a spokeswoman said. She also said Latin America "remains a priority" despite loss of market share and recent deep job cuts (by contrast, RIM tripled its Latin American sales in 2008).
So there are deepening fears that Motorola has gone beyond cutting fat and is now eating into muscle. The latest executives to depart are long serving VPs Yvonne Verse, who handled strategic partnerships, business development and intellectual property, and Tracey Koziol, in charge of product development.
Consensus Wall Street forecasts suggest Motorola will report a loss of one cent per share for Q4, though some are still holding out for breakeven.
Related Stories
More MOTOROLA News
More RESEARCH IN MOTION News
More IPHONE News
COMMENTS
Digital Money: The Convergence of Contactless Card and Mobile Payments
This report examines the emergence of digital money from the perspective of the convergence of card-based proximity payments to the...
Cloudbooks: Market Analysis and Forecasts
This report is based on interviews with device OEMs, retailers and resellers and provides a comprehensive analysis of the new cloudbook...
Satellite Phones: Will Dual Mode Help the Phoenix Rise from the Ashes?
Satellite phones have followed an arduous path since their much-hyped launch more than a decade ago. The hype was followed by an e...
