After some major cost cuts and the introduction of new selection of phones to follow up on the RAZR success, Motorola (NYSE: MOT) today reported $60 million in net earnings on the back of $8.8 billion in sales; this is an improvement on the net loss of $28 million posted in Q207. However, the Q307 figure is still down hugely from the earnings of $968 million in Q306, and key divisions like handsets are still struggling.
— Handset sales: These totalled $4.5 billion, down 36 percent over a year ago; the segment had an operating loss of $138 million, compared with operating earnings of $843 million in the year-ago quarter. The RAZR was Motorola’s shining light, selling some 100 million units, but in Q207 its market share dropped to 14 percent from 22 percent in the same period a year ago, according to Bloomberg, and Motorola now says it’s dropped again to 13 percent.
— The follow-up RAZR 2 has sold 900,000 units; and mobile sales overall totalled 37.2 million units. Motorola continues to have a challenge ahead in presenting compelling products in light of advances from new and incumbent handset makers like Apple, RIM, Nokia (NYSE: NOK) and Samsung.
— Future services: Motorola has said it wants to build on success it’s had in individual markets — for example it is planning to expand the successful music service it launched in China; it also wants to launch a content portal — and it is also investing in functionality like mobile banking and user interfaces.
— Cost-cutting: Zander has laid off 5,100 people so far in 2007 and plans to axe another 2,800; it’s also cut its R&D budget by 15 percent. There’s been a big upheaval in management this year, with Greg Brown, once head of the networks and enterprise business, now president; Thomas *Meredith* (ex-Dell) hired as finance chief; and Stu Reed now leading the handset unit, having been in charge of the vendor’s supply chain. But the biggest change of all may still be to come: vocal shareholder Carl Icahn may once again renew his calls for CEO Ed Zander’s head on a plate.
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