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Summary:

Motorola CEO Ed Zander has been calling the company’s handset results “unacceptable,” with a pledge to improve performance. But it looks like it’s going to take several quarters to try to fix the problem. The company posted first quarter sales of $9.43 billion – close to […]

Motorola CEO Ed Zander has been calling the company’s handset results “unacceptable,” with a pledge to improve performance. But it looks like it’s going to take several quarters to try to fix the problem. The company posted first quarter sales of $9.43 billion – close to its previous forecast — but lower than the first quarter of 2006, and a net loss of $181 million.

Moto’s wings got clipped by the handset business. Motorola’s mobile devices division brought in $5.4 billion in sales, down 15 percent compared with the year-ago quarter, and an operating loss of $231 million, compared with operating earnings of $701 million in the year-ago quarter. Blame it on the profitless prosperity of cheap phones, and over reliance on the RAZR.

Mark Sue from RBC says:

It’s got to stop getting worse before it gets better and we’re looking for another bumpy ride in 2Q as channel inventories clear and Motorola adjusts its mobile devices business model.

Motorola says it expects a “gradual recovery” in the mobile devices division starting in the second half and expects to be profitable for the full year.

Not that we are surprised at the results – Motorola does okay for a couple of quarters, press applauds and then the sky falls. Its like an iPod set on repeat-playback mode.

Seeking Alpha points out: “the company managed to end the quarter with higher inventory than when it began. That, in turn, sounds like a recipe for further discounting and more trouble for the entire wireless sector.” True dat.

By Katie Fehrenbacher

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  1. Moto has always done this in the handset department. They swing for the fences and strike out a lot. First came the Startac and people were like OMG. They sold gazillions of them. Then sales dropped and Moto choked. Then they came out with the RAZR and they sold gazillions of them. Then sales tank again. You’d think that Motorola would realize this pattern (if we all do) and have Zander kick the team to keep up a decent amount of cell phones through the pipeline.

    Ok, so since the RAZR they’ve come out with phones that lack vowels, like the PEBL, RIZR that are merely variations on a theme. There’s nothing there that would make me go from one Moto phone to another. How about quit spending all that money on marketing phones held by androgynous models and focus on something that would make us all excited. Hire some engineers from HTC/Nokia/SE and try to go away from hip and trendy back to functional first. Motorola basically has 5 phones with a lot of variations of them. Nokia seems to have dozens.

    What they need to do is come out with more phones spanning the price range, from cheapies to midrange phones to higher end phones? What happened to the good ol’ days when Motorola was pushing out phones with OLED displays?

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  2. Motorola definitely is losing a market share to Nokia and is going through some serious decline, however, investors still think that the company has potential to recover, that is if the company restructures itself — FiscalTimes has a report on MOT — http://fiscaltimes.com/2007/04/17/hello-moto-why-you-should-be-looking-at-motorola/

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