Motorola's (NYSE: MOT) share of global handset sales has fallen from about 22% three years ago to 12%. Its cell phone division revenue is dropping at a rate of over 30% and loses money ever quarter.
For Motorola to break back into the black, it not only needed to launch new products to pick up market share, but it also needed the worldwide handset business to stay healthy. No such luck.
According to Reuters, "South Korean mobile phone makers Samsung Electronics and LG Electronics have cut their 2009 sales targets as a global downturn spreads." By most accounts these companies and other large manufacturers like Sony Ericsson and Nokia (NYSE: NOK) have the financial resource to weather a tough year or two. Not so at Motorola.
Motorola had planned to spin off its handset unit, but that has been delayed. The company's other businesses are profitable, so the cell phone business is dragging them down. MOT shares are off 75% this year to just over $4.
As hard as it would have been to imagine a year ago, Motorola may still have to dump its cell operation and perhaps put it into Chapter 11. Its fate is that grim. It needs to escape its employee and creditor obligations to make it.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 1)
12-03-2008 @ 5:00AM
Terry Anne said...
What happens to the stock cerificates when shares hit rock bottom Like MOT is heading?