How Low Can Moto Go?

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UPDATED: Yesterday, I compared Co-CEO of Motorola (s MOT) and CEO of Mobile Devices Dr. Sanjay Jha’s task of restoring his company’s handset business to climbing Mount Everest without a tank of oxygen. Man, was I being generous or what? The company reported Q3 2008 earnings and delivered a forecast for the remainder of 2008 that is dismal. The once-storied name is vying for the Worst Run Business award. Why?

Mobile device sales were down 31 percent year-over-year, and the division logged an operating loss of $840 million or about 2.4 times the money it lost in the year-ago quarter. It says the losses were necessary because it was rationalizing its business. Update: Now the rationalization may be at an end with the company telling the Wall Street Journal that it plans to lay off 3,000 employees, mostly from the handset division.

The sales decline in the handset business has been going on for nearly two years, so that even I am getting bored of writing about it. In the past seven quarters, the company has lost a total of $2.625 billion in its handset business. (Checkout the performance of the handset business in the table I cobbled together from their earnings releases, below.)

On the flip side, Motorola is doing rather well in its enterprise, government and video divisions. It needs to get rid of the handset business fast — but it can’t! Jha says that the company is no longer targeting Q3 2009, the previously targeted date to spin out the division. Given the speed with which it is losing market share and money, it may not have much to spin out.

Revenues Loss Handsets Sold
Q3 2008 $3.1 billion $840 million 25.4 million
Q2 2008 $3.3 billion $346 million 28.1 million
Q1 2008 $3.3 billion $418 million 27.4 million
Q4 2007 $4.8 billion $388 million 40.9 million
Q3 2007 $4.5 billion $138 million 37.2 million
Q2 2007 $4.3 billion $264 million 35.5 million
Q1 2007 $5.4 billion $231 million 45.4 million

21 Comments

Motorola Handsets Still Hemorrhaging

[…] sold only 19.2 million phones, in line with expectations. With a quarterly loss of $595 million, Moto’s handset business has lost a collective $3.22 billion in the last two years. All other business units at the company reported earnings increases, among […]

Motorola Betting Billions on New Handset Spinoff

[…] The soon-to-be independent handset division has other advantages as well. By leveraging Google’s Android operating system with the right carrier partner in Verizon, co-CEO Sanjay Jha has helped ensure the success of the Motorola Droid. And operating losses for the handset division have dropped to $192 million in the most recent quarter from $840 million in the third quarter of 2008. […]

Motorola Handsets Still Hemorrhaging

[…] sold only 19.2 million phones in line with expectations. With a quarterly loss of $595 million, Moto’s handset business has lost a collective $3.22 billion in the last two years. All other business units at the company reported earnings increases. Those […]

Layoffs Come to Telco Land - GigaOM

[…] its tool on the telecom ecosystem. We have already reported about the job cuts at Nokia (600) and Motorola (3,000) and with Nortel likely to cut about 10% of its work force. The malaise has started to spread to […]

Layoffs Come to Telco Land - GigaOM

[…] its tool on the telecom ecosystem. We have already reported about the job cuts at Nokia (600) and Motorola (3,000) and with Nortel likely to cut about 10% of its work force. The malaise has started to spread to […]

The Incredible Shrinking Man

Motorola Devices is a sci-fi horror movie. “And I felt my body dwindling, melting, becoming nothing. My fears locked away, and in their place came acceptance. All this vast majesty of creation, it had to mean something. And then I meant something, too. Yes, smaller than the smallest, I meant something, too. To God there is no zero. I still exist.” The Incredible Shrinking Man

hodari

Does this covers the hand sets that Motorola sells for enterprise environment which it aquired from symbol ?

bunny

motorola phones turn out to be a flop in to to the market.it can have lots of reason behind it.
like motorola’s pones are slow and left handed.its just not that there could lot more behind it.

Jesse Kopelman

@Ian Bell

You don’t really believe Moto has user interface designers, do you? It’s clear to me that they have always left that stuff up to whatever intern happened to be available once the hardware was finished.

charlie

Sell the Ming and Razr to some Chinese OEM; and close the rest. Sorry. Nokia is next.

Om Malik

Ian Bell

My fix for this division – shut it down, save the money and move on to become a smaller and a better company.

Ian Bell

Yesterday Moto said it was consolidating its handset business down to three operating systems. Uh…. how is that considered consolidation?

Motorola’s consumer products exhibit a disdain for the schmucks that buy them that I’ve found to be unique. The reliability, ease-of-use, and functionality of the software on their phones and PVRs should be an embarrassment.

My Px for fixing Motorola Wireless:

– Fire the middle managers who believe that the RAZR is their jesus phone.
– Fire all of Motorola’s User Interface designers across the business.
– Support two OSes made by third parties: Android and Windows Mobile.
– Focus on the hardware. They actually have reasonable success at this when the hardware itself can be a differentiator.

Not that difficult.

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