Motorola’s co-CEO Sanjay Jha confirmed In Motorola’s Q3 conference call this morning that it was streamlining its handset business to focus on three operating systems going forward — Google’s Android, Microsoft’s Windows Mobile, and it’s own P2K platform for low-cost handsets. The call followed the release of a disappointing Q3 earnings (see our story here). The company reported a net loss of $397 million, or 18 cents a share compared with a profit of $40 million or 3 cents a share in the same quarter a year ago. Sales dropped 15 percent to $7.48 billion from $8.81 billion a year ago. It also confirmed that the spin-off of the troubled handset business would take longer, and was no longer targeted for Q3 2009.
UPDATED: Motorola (NYSE: MOT) didn’t put a number on job cuts during the conference call, but later in the day it announced it will slash 3,000 jobs, or 4.5 percent of its global workforce, with around 2,000 of the job losses hitting the beleaguered cell phone unit.
– Operating systems: Jha: Will be streamlining number of operating systems. Too much complexity in business, will focus on Android, Windows Mobile, and own P2K platform for low-cost handsets. Will no longer support Symbian UIQ (which plans to be rolled up into the Symbian Foundation) or own Java-Linux platform. Consolidation of platforms should reduce expenses on OS development. Will refocus on the handset, especially Android and Windows Mobile, for high-end and smartphones. First Android product slated for holiday season 2009. Focusing on certain regions: North America (where it still is number one handset manufacturer), Latin America, and certain markets in Asia.
– Guidance: Expects to improve losses in 2008, can’t guide to break even. Greg Brown adds that early 2009 will be painful, but should be better compared to 2008.
– Emerging Markets China be a focus for us. Pretty good growth. In India, pretty good growth, but gross margin growth more challenged.
– Android: Plans to expand from high tier to high and medium tier in 2009. Will launch a number of handsets at different price points using Android, Windows Mobile.
– 3G Phones: Expect to launch many more in second half based on Qualcomm (NSDQ: QCOM) chips.
– Ownership of OS not important? Where is differentiation?Have invested some time in Java-Linux platform. It’s not just about creating OS, but luring developers to build applications for it. Very difficult to do. See a stronger system developing around Android, for example. We will work very hard with Android guys, will work very closely to offer differentiated products. Plans to open office in Seattle to work closely with Microsoft (NSDQ: MSFT) on Windows Mobile to offer differentiated products. Possible to offer differentiation without owning platform. Invested in Linux for years, and can bring some of that to Android.
– Time to market on phones–why so long?: One of the things that we need to do better is execution on software strategy. Execution has been poor. Talent we are looking for is software execution. Have great software talent around the world. Ex Good Technology staff working on forward-looking developments. In terms of time to market, once we get these platforms solidified and delivering products, will have much better oiled machine and will be competitive with other folks in the industry.
– Consider spinning out Networks business? Pleased with where we are in WiMax and LTE, working with operators who may become anchor tenants in LTE. That said, we are pragmatic, will consider partnerships.
– Separation: Brown: The premiere thing we have to keep eye on–macroeconomic environment. Makes it difficult. We would have started to expend cash in 2009 toward separation, don’t want to spend that in this environment right now. Want to see significant return to profitability first.
– Design of phones? How can change design culture at Motorola? Has been too focused on bright shiny objects, not enough focus on user experience. I believe design culture at Motorola doing wonderful job. As we look at two platforms Windows Mobile, Android, past Windows Mobile OS has not delivered experience Apple (NSDQ: AAPL) has delivered. But WM6.5, 7 is improving. Targeting new teams in California and Seattle to deliver experiences. That’s where to differentiate. That’s where competitors have done much better.