Light Reading

Moto Hangs Hopes on Android

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor

Motorola Inc. (NYSE: MOT) posted a brutal $3.6 billion loss and a 26 percent revenue decrease for its fourth quarter this morning, as CFO Paul Liska took his leave and the company cut its dividend.

Motorola posted a loss of $3.58 billion, or $1.57 a share, on revenues of $7.14 billion. That compares to Moto's year-ago profit of $100 million, or 4 cents a share, on revenues of $9.65 billion.

The company reiterated that it is undertaking cost-cutting measures, including the loss of 7,000 jobs, meant to save $1.5 billion in 2009. (See Kicking Moto While It's Down and Moto Will Lay Off 4,000 More.)

The Schaumburg, Ill., company says its bottom line was hurt by several one-time items, including an allowance for deferred tax valuation, expenses related to layoffs, and goodwill charges. The company is, however, still feeling the pinch from falling sales at its handset unit.

The mobile devices unit’s sales were $2.35 billion, down 51 percent compared with the year-ago quarter. The operating loss was $595 million, compared to an operating loss of $388 million in the year-ago quarter. During the quarter, Motorola shipped 19.2 million handsets and estimates its share of the global handset market was 6.5 percent.

”We’re completely committed to making the handset business work,” co-CEO and Mobiles Devices chief Sanjay Jha said on Motorola’s conference call this morning. He couldn’t, however, say when that would mean that the unit would move from an operating loss to breakeven. “Sometime after 2009, whether it's 2010 or 2011, I’m not going to speculate,” Jha speculated.

Many of the 7,000 job cuts will come at the phone unit. The company says that around 1,000 employees have already been cut across the board and the axing will be completed by the end of the second quarter.

Motorola, meanwhile, plans to focus on the smartphone market and use Google (Nasdaq: GOOG)’s Android operating system to help it get there. Thirty to 40 percent of the unit’s R&D budget will go on smartphones this year, according to Jha. (See Moto Ditches Symbian for Android & Windows.)

The company is pulling back from its focus on Windows Mobile in 2009, however. “Yes we are still committed to Windows Mobile,” Jha said on the call. “[But] in 2009 we believe Android is more competitive… In 2010, when windows Mobile 7 will become available, we will focus more on Windows.”

The company has said its first Android phone will be ready for the holiday season 2009. Jha said on the call that the unit’s previous work on Linux and Java will allow it to “differentiate” phones using the operating system from other vendors using the same OS, which will likely include almost every major phone maker.

"This is Motorola’s last chance," writes Nomura International analyst Richard Windsor in a research notes. "I think that if Android fails to deliver the needed revenue and profit recovery, then the focus will be oriented on managing the business for oblivion."

Jha admits that he has a difficult road ahead of him. “We have our work cut out for us in 2009,” he says. All of this means that Motorola execs were pretty candid about having no timetable for the planned spinoff of the handset business, but they insist that it will still happen.

The company’s networking business is performing much better than the phone unit, as CEO Greg Brown highlighted. “We’re profitable in GSM, we’re profitable in CDMA, we’re profitable in iDEN, despite significant investment in R&D for 4G -- both LTE and WiMax -- with minimal return at the moment,” says Brown.

Home and Networks Mobility segment sales were $2.6 billion, down 5 percent compared with the year-ago quarter. Operating earnings increased to $257 million, compared with operating earnings of $192 million in the year-ago quarter.

The enterprise wireless networking business is doing best of all. Enterprise Mobility Solutions segment sales were $2.2 billion, up 4 percent compared with the year-ago quarter. Operating earnings increased to $466 million, compared with operating earnings of $451 million in the year-ago quarter.

Shares of Moto were down 0.51 (11.23%) to $4.03 in late morning trading on Tuesday. Moto shares have lost 68 percent of their value in the past 12 months, compared to the S&P 500 Index, which is down 40 percent.

— Dan Jones, Site Editor, Unstrung

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Telecom Innovators Video Showcase
Automate, Scale & Create With Juniper's vCPE Solution

10|1|15   |   6:34   |   (0) comments

Join Kireeti Kompella, Juniper Networks CTO, and Steve Saunders, Light Reading Founder and CEO, as they discuss Juniper Networks' approach to NFV showcased with a turnkey vCPE solution, which demonstrates how service providers can use automation to rapidly deploy services.
LRTV Interviews
Gigabit Europe: Day 1 Takeaways

9|29|15   |   05:47   |   (5) comments

Light Reading's Ray Le Maistre and Iain Morris sup a beer and discuss some of the key takeaways from the first day of Gigabit Europe 2015.
LRTV Interviews
Gigabit in Europe

9|29|15   |   04:24   |   (0) comments

At the Gigabit Europe 2015 event in Munich, Heavy Reading's Graham Finnie talks about the availability of gigabit broadband in Europe.
Women in Comms Introduction Videos
AT&T's Band of Women

9|28|15   |   4:36   |   (0) comments

Brooks McCorcle, the president of AT&T's partner solutions divisions and a mathematician by trade, shares stats on AT&T's diversity and advice on how to create your own band of women at work.
Telecom Innovators Video Showcase
Metaswitch's New CEO Martin Lund Discusses His Role

9|25|15   |   11:36   |   (0) comments

Technology industry veteran Martin Lund joins Metaswitch Networks this week as the company's new CEO. In this interview, Lund discusses his new role and the industry's progress with Light Reading CEO Steve Saunders. Lund believes that the industry disruption caused by SDN and NFV is creating opportunities for companies like Metaswitch – network software providers ...
It's All About That App

9|23|15   |   02:15   |   (2) comments

The long-range goal of service providers is to deliver app-specific network performance and that is showing up in technical developments today.
Women in Comms Introduction Videos
Verizon's Healthy Approach to WiC

9|22|15   |   2:30   |   (2) comments

If you think there are too few women in comms, you should see the healthcare industry. Nancy Green, Verizon's healthcare global lead, shares ideas on what we can do about it.
LRTV Huawei Video Resource Center
UBBF 2015 Highlights

9|22|15   |     |   (0) comments

Drilling down deeper into the transformation process will provide network operators with a practical look at building new businesses around a digital virtualized network architecture, and lay out some of the transition steps required, particularly in the struggle to enable more dynamic and focused enterprise network services.
Telecom Innovators Video Showcase
ActiveVideo's Cloud Virtualization Technology

9|22|15   |   7:23   |   (0) comments

ActiveVideo's CMO, Murali Nemani, discusses how virtualized CPE functions can deliver applications from the cloud to various devices at home.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Communication service providers realize that an ICT transformation is critical to their long-term survival, but most haven't yet committed to making it happen.
Hot Topics
Are Sports Next for Netflix?
Mari Silbey, Senior Editor, Cable/Video, 9/28/2015
Google Gives Huawei a US Device Boost
Dan Jones, Mobile Editor, 9/29/2015
Verizon's Go90 Is Live – Will Anyone Watch?
Mari Silbey, Senior Editor, Cable/Video, 10/1/2015
Following the Bouncing Capex Ball
Carol Wilson, Editor-at-large, 9/29/2015
Good News for NFV Interoperability
Steve Saunders, CEO and founder, Light Reading, 9/29/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
Hold My Calls, Indefinitely Click Here