Motorola Inc. (NYSE: MOT) is like the guy who was cool in high school and still tries to impress girls at the football game when he's 30.The once-cutting edge technology company reported dismal third quarter results. The results were not as wretched as Wall Street had expected but they stunk nonetheless. Motorola's net loss was $397 million, or 18 cents a share, compared with $60 million, or 3 cents, a year earlier. Sales plunged 15% to $7.48 billion. Excluding costs to fire people, profit was 5 cents a share, beating the 2-cent average estimate of analysts polled by Bloomberg News. The revenue figure trailed the $7.82 billion Bloomberg estimate.
But neither the results nor the company's statement that it has exceeded its goal of cutting $1 billion in costs impressed investors who sent shares of the Schaumberg, Illinois-based company tumbling in early morning trading today. The company's plans to separate its headset business from the part that actually makes money is on hold. For how long, it's not clear.
In a press release, Sanjay Jha, Motorola's co-chief executive officer and CEO of Mobile Devices, said, "While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices."
Jha, who was recruited by Motorola from Qualcomm Inc. (NASDAQ: QCOM), goes on to say, somewhat vaguely, that the company has made progress on the separation and "will continue to prepare for a potential transaction." So, Motorola is going to continue to prepare for something which may not happen for a year or two, if at all. That does not seem to make a heck of a lot of sense, but then again, neither did separating the handset business in the first place.
During the last quarter, Mobile Devices had an operating loss of $840 million, more than double the $248 million loss form the year-earlier period. People are holding onto their old cell phones as the economy sours. Those who are purchasing phones, like me and my wife, are getting models such as the Apple Inc. (NASDAQ: AAPL) iPhone 3G. We did not even consider a Motorola.
Jha and his fellow co-CEO Greg Brown have a herculean task of turning around a company that has been hobbled by bad products and incompetent management. Their first order of business will be figuring out how to share power. Jha expected to run his own show. Forcing two CEOs to share power over one company is like herding cats. Theoretically, it's possible, but in reality it's unlikely. Chances are Jha or Brown will leave the company before the Mobile Devices business gets separated -- if it ever happens.
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Reader Comments (Page 1 of 1)
10-30-2008 @ 7:16PM
James said...
If Six Sigma is such a miracle program why is Motorola going under?
They still advertise this program for sale all over the web and colleges use it as if a god sent it. After all, Motorola engineers invented this great money maker and even General Electric swallowed it hook line and sinker.
Lay off the bottom 10% of your employees,the bad ones that managers don't like or can not work with.
In ten years you should have all new people ,right?
No wonder GE is in trouble also.
The world went nuts and now the workers pay the bills lol.
James the less