How Low Can Moto Go?
UPDATED: Yesterday, I compared Co-CEO of Motorola 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 |
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:
Not that difficult.
Ian Bell
My fix for this division – shut it down, save the money and move on to become a smaller and a better company.
Moto magic is gone for long. Rephrased quotes “It is not better to be late than sorry”. ;-)
Sell the Ming and Razr to some Chinese OEM; and close the rest. Sorry. Nokia is next.
@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.
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.
Does this covers the hand sets that Motorola sells for enterprise environment which it aquired from symbol ?
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
[...] (Via GigaOM.) [...]
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[...] that profit boost is why Jha is betting on Android — and why the bet must succeed. Motorola doesn’t have any more aces, and consolidation is a real threat for the handset [...]