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Motorola Handsets Still Hemorrhaging

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logoUpdated: Oh no, Moto! The handset and equipment maker reported a $3.6 billion loss today on sales of $7.1 billion for the fourth quarter of 2008.  Motorola’s (s MOT) handset business 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 them network equipment, set-top boxes and RFID systems.

As part of the financial results, Moto said will suspend its dividend, and that CFO Paul Liska has left after less than a year. Corporate Controller Edward J. Fitzpatrick will take his place while a new CFO is found.

The handset business is dragging down the company, and there’s no end in sight. Motorola can’t sell it, and turning the business around in the current economic climate is, as Om puts it, “like climbing Mount Everest without a tank of oxygen.” There are some indications that Motorola may be giving up, as it lays off more handset employees, and hints at dumping operating systems. Update: Motorola Co-CEO Sanjay Jha said today on the results call that Motorola will focus for now on Google’s (s GOOG) Android platform, because “it’s more competitive” than Windows Mobile. Maybe Moto should talk to Dell (s DELL). I hear Michael is interested in handsets and some people there are pretty familiar with the Moto business. Wow, that would be a culture clash!

8 Responses to “Motorola Handsets Still Hemorrhaging”

  1. I totally agree with Tom. I tried several of there phones in the last few years they just don’get it. The last ruggedized phone I got from verizon what a piece of crap. They called it water resistant and compared to the Casio what a farce the back (battery cover ) was so flimimsy and thin it could not seal the back I just could belive they wanted 150 for it.

  2. Moto had the second largest handset business on the planet (after Nokia) when the handset market was larger and growing faster than just about any other market there is. Then in the first half of this decade they got arrogant, coasted on the Razr’s success, basically ignored emerging trends (i.e. “the web in your pocket”), and stopped significant innovation.

    But it’s not too late. Moto still has plenty of resources to leverage — particularly their distribution expertise and operator relationships. If they they can identify and acquire innovations that take the mobile experience to a new level (particularly the mobile Web experience), they could once again leverage a few million dollars in R&D into billions in sales. They might have to start by repopulating their handset division (from bus dev to product design) with hungry, creative, aggressively innovative individuals.

  3. the biggest mistake motorola made was almost 10 years ago when it moved away from selling super sturdy, tough, reliable basic handsets that appealed to business and people who just wanted a reliable good quality phone. instead they brought out the razor and went after the fashion phones from nokia samsung and others. motorola does not understand that part of the business.

    they should go back to highly functional reliable phones at good prices and forget about being sexy. nokia’s and iphone’s fill that role fine.