Sunday, June 22, 2008
Motorola Im-mobile
Motorola Inc. (NYSE: MOT) has big problems - Systemic problems - and they're not going away. If anything, they're going to get worse before a turnaround, if at all, and Wall Street seems to be out front and center trying to flog this dying horse by pricing its shares to a new five year low.
The latest pressure on Motorola shares was triggered by bearish comments about Motorola from Samuel Chin, Chairman of Foxconn International Holdings Ltd., the world's largest contract maker of mobile phones whose bottomline was impacted after Motorola sales fell 33% in 2007. But this is just a symptom that Motorola has been going in the wrong direction for quite some time now.
For starters, a recent JD Power survey (via Intomobile) found that a full 24% of Motorola RAZR users (20,000 users polled) decided to ditch their aging and barely functional clamshell to the huge multi-touch display on the Apple iPhone. Now, with 5.4 million iPhones sold to date, that the survey points to 1.3 million former RAZR customers fully embracing the iPhone.
When you start losing customers on such a vast scale, its time to go back to the drawing board. Unfortunately, instead of ramping up its R&D and product development, Motorola is making cuts to its R&D Division.
RCR Wireless News report says that Motorola Inc. is eliminating about 120 of the 600 positions in Motorola Labs, the unit responsible for basic research in everything from cellphones to radio technology. Another 180 workers are being reassigned to work in individual business units, ranging from cellphones to set-top boxes. The other 300 workers will remain with a much smaller unit to be renamed the Applied Research & Technology Center.
Watching customers being stolen, and then adding to the problem by firing or shunting out half your research staff is a one-two punch from which Mototola will find it very hard to come out of, at least for the next 12 months. Note: The company says its part of an effort to 'revitalize its R&D program, but the bottomline is that they're starting from scratch, and it'll take time to rebuild.
To add to the pain, top executives at Motorola have quit, and Wall Street analysts are predicting a bad forecast for the rest of 2008, with a loss of upto 8 cents per share, further erosion in market share and no clear plan or leader to pull the company out of this mess.
The latest pressure on Motorola shares was triggered by bearish comments about Motorola from Samuel Chin, Chairman of Foxconn International Holdings Ltd., the world's largest contract maker of mobile phones whose bottomline was impacted after Motorola sales fell 33% in 2007. But this is just a symptom that Motorola has been going in the wrong direction for quite some time now.
For starters, a recent JD Power survey (via Intomobile) found that a full 24% of Motorola RAZR users (20,000 users polled) decided to ditch their aging and barely functional clamshell to the huge multi-touch display on the Apple iPhone. Now, with 5.4 million iPhones sold to date, that the survey points to 1.3 million former RAZR customers fully embracing the iPhone.
When you start losing customers on such a vast scale, its time to go back to the drawing board. Unfortunately, instead of ramping up its R&D and product development, Motorola is making cuts to its R&D Division.
RCR Wireless News report says that Motorola Inc. is eliminating about 120 of the 600 positions in Motorola Labs, the unit responsible for basic research in everything from cellphones to radio technology. Another 180 workers are being reassigned to work in individual business units, ranging from cellphones to set-top boxes. The other 300 workers will remain with a much smaller unit to be renamed the Applied Research & Technology Center.
Watching customers being stolen, and then adding to the problem by firing or shunting out half your research staff is a one-two punch from which Mototola will find it very hard to come out of, at least for the next 12 months. Note: The company says its part of an effort to 'revitalize its R&D program, but the bottomline is that they're starting from scratch, and it'll take time to rebuild.
To add to the pain, top executives at Motorola have quit, and Wall Street analysts are predicting a bad forecast for the rest of 2008, with a loss of upto 8 cents per share, further erosion in market share and no clear plan or leader to pull the company out of this mess.
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