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Summary:

Motorola continues to lose market share and more importantly money in its handset business. And the way things are going, it might never be able to spin off the division that has bled over $2.6 billion in last seven quarters with no end in sight.

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
  1. 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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  2. Ian Bell

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

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  3. Moto magic is gone for long. Rephrased quotes “It is not better to be late than sorry”. ;-)

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  4. [...] (Via GigaOM.) [...]

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

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  6. @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.

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  7. [...] of this was in my mind when I came across this GigaOm piece, in which Om Malik covers the horrific returns of Motorola’s handset business — $2.625 [...]

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  8. 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.

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

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  10. The Incredible Shrinking Man Saturday, November 1, 2008

    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

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  11. [...] 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 [...]

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  12. [...] 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 [...]

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  13. [...] group said. RAZR was ranked as the top seller for past 12 quarters. That is bad news for Motorola, which is already on the mat after being pummeled with losses and declining market share. Funnily enough, phones with [...]

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  14. [...] spokesperson said when questioned about the veracity of this information. A quick glance at the track record of Motorola’s money-losing handset division over the past two years will show, however, that it’s in dire need of some sort of [...]

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  15. [...] Motorola quando questionados sobre a veracidade destas informações. Um rápido olhar sobre a trajetória da Motorola do branqueamento de perder microtelefone divisão ao longo dos últimos dois… no entanto, que ela está em dire necessidade de algum tipo de [...]

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  16. [...] 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 [...]

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  17. [...] turnaround story coming, and we’ll definitely keep our eye on them, but it’s no fun to air the same old doubts every single time we mention [...]

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  18. [...] the telecom ecosystem that MapleWorks is part of. Gigaom identified dramatic cuts at Nokia (600), Motorola (3,000), and Nortel (10% of its work [...]

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  19. [...] 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 [...]

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  20. [...] 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. [...]

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  21. [...] 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 [...]

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