By Jeff Meisner E-Commerce Times
10/30/08 11:54 AM PT
Any positive glow from the news that Motorola intended to rejigger its mobile handset unit by training its focus on the open source Android operating system has been short-lived. The company posted a dismal financial report and announced that it would slash another 3,000 jobs and put its wireless unit revamp on hold.
How Much is 'Free' Costing You? Learn how DaveRamsey.com saw a 567% uplift in ROI with Omniture. This complimentary guide and webinar cover the most important factors in selecting an analytics solution. Download Now.
Motorola (NYSE: MOT) announced a new round of layoffs as it reported a 15 percent decrease in revenue during the third quarter on Thursday.
"Approximately 3,000 employees will be affected globally across all businesses and functions," company spokesperson Maya Komadina told the E-Commerce Times.
The company also said it will postpone the spinoff of its wireless devices unit until some time after 2009.
The No. 3 handset manufacturer reported a loss of US$397 million in the third quarter, down from a profit of $40 million during the same period a year ago. Motorola reported $7.48 billion in revenue, below average analyst estimates of $7.8 billion.
Wireless Refocusing
The company's results in the mobile handset division, run by Co-CEO Sanjay Jha, were equally abysmal. It shipped 25.4 million handsets in the third quarter, compared to 37.2 million handsets during the same period a year ago.
The unit's revenue fell 31 percent to $3.1 billion, while its operating loss ballooned to $840 million from $248 million. Jha warned that the company's fourth-quarter earnings would also miss analyst expectations. Motorola's stock was down 7.14 percent to $5.07 per share in mid-day trading on the New York Stock Exchange.
The bad financial news comes just one day after reports that Motorola has scrapped several internal mobile software projects in favor of Google's open source Android architecture, Microsoft's (Nasdaq: MSFT) Windows Mobile operating system and Motorola's own P2K mobile platform. Those plans are now evidently in limbo.
Motorola has been beset by problems since 2006. Including the latest layoffs, it has cut 13,000 jobs in an effort to conserve cash and streamline its various businesses since early 2007.
Not Ready for Spinoff
Motorola's decision to delay the spinoff of its mobile devices unit may have been prudent, said Carl Howe, a wireless analyst at the Yankee Group.
"They decided to refocus the unit around Android and Windows [Mobile]," he told the E-Commerce Times, "and I think they've decided not to spin it off until they've got it focused."
One of the reasons a company executes a spinoff is to focus people on just one business, Howe said.
"One of the challenges for the mobile handset group is they're in the middle of a company with a lot of different businesses," he explained. "[Motorola] sells radios to first responders and the military. Those businesses are very different from the business-to-consumer world, which is so dependent on marketing."
Howe said it's rare for any company that has a very successful business-to-business segment to also have a successful business-to-consumer segment.
"The B2B business is somewhat more stable, and that's because it doesn't depend upon the whims of consumer fashion," he said. "Remember, it wasn't that long ago that the Razr was the hottest phone on the market."
Samsung Sinks on Slumping Profits October 24, 2008
Samsung is feeling the pain from an oversupply of product in the semiconductor market, with profits sliding 44.4 percent year-over-year for its third quarter. Still, the company has managed to stay in the black and has taken some steps to shore up its operations.
Related Stories
Will Motorola Bet the Farm on Android? October 29, 2008
Motorola -- badly in need of a makeover -- appears to be placing all its hopes on Android, Google's open source mobile operating system. Right now, HTC is the only device manufacturer building a handset to run on Android, and T-Mobile is the only carrier offering it; the G1 made its debut last week.
Will Motorola Take Android Down Social Path? October 20, 2008
Buzz surrounding Motorola's plans for Android continues. The latest report suggests that social networking will figure heavily into the company's first phone featuring Google's operating system. Motorola hit the jackpot in hardware design years ago with the Razr, but it's failed to produce a big follow-up since. Software may be the key.
Motorola Looks to Touch Off Comeback With New Krave October 14, 2008
The Krave ZN4 from Motorola is both a flip phone and a touchscreen handset. The transparent flip-up cover allows some features to be used when the device is closed. The Krave fills a gap in Motorola's catalog, but it will take much more than just one phone to get the company back to its once-dominant status.
Related News Alerts
More by Jeff Meisner
AT&T Launches Netbook-With-Service Experiment April 02, 2009
AT&T is plugging a new plan in Atlanta and Philadelphia, offering netbook computers for as little as $50 to consumers who sign up for a monthly broadband access plan at $60 a month or more. The deal might be especially attractive to mobile workers in the healthcare and financial services sectors, who need more than a smartphone to conduct their business.
Microsoft Offers Small-Biz Server Value Meal April 01, 2009
Microsoft has unveiled a budget-minded server package for small businesses, providing the hardware, software and administrative services necessary to run their operations in much the same way that larger enterprises do. The offering could provide some competition for cloud-based hosted services, which have been gaining traction.
New Google VC Fund on the Prowl for Great Ideas March 31, 2009
Google is pouring some of its millions into a new venture fund on the lookout for innovations, particularly in the consumer Internet, software, clean tech, biotech and healthcare arenas. The move may seem counterintuitive during a recession, but Google argues that "great ideas come when they will."
Headline Feeds
Talkback: 
