Light Reading

Moto Hangs Hopes on Android

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
2/3/2009
50%
50%

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
Flash Poll
From The Founder
Networks of the future will rely on "white box" switches and servers rather than proprietary hardware and that's going to alter the shape of the communications industry. Who says so? John Chambers.
LRTV Huawei Video Resource Center
Huawei Intros Smart Device for eLTE

3|30|15   |   05:25   |   (0) comments


Huawei has developed a secure, location-aware multimedia smartphone for its eLTE trunked radio solution, says Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
Win Video, Win All

3|30|15   |   06:44   |   (0) comments


Video is going to be the next main source of revenue for operators. Operators have big opportunities and advantages to monetize video services. Globally, Huawei has helped more than 70 operators achieve over 30 million video subscribers. Watch this video for more.
LRTV Custom TV
The Benefits of HyperScale Clouds for NFV

3|27|15   |   01:50   |   (0) comments


Hyperscale cloud has been developed by the Internet giants to support the creation and delivery of software-based services at blistering speeds, and at the lowest possible cost. The original ETSI NFV vision was to adopt hyperscale cloud architecture and practices. This vision has become somewhat obscured along the way, due to misunderstandings about the hyperscale ...
LRTV Huawei Video Resource Center
eLTE Rapid Meets the Need for Speed

3|26|15   |   4:45   |   (0) comments


Designed especially for emergency and dedicated ad hoc local mobile communications coverage, Huawei's eLTE Rapid solution can deliver trunked voice, video and data coverage for multiple users over a 6km range and be set up in just 15 minutes, explains Huawei's Norman Frisch.
LRTV Huawei Video Resource Center
On Videos: Challenges & Opportunities

3|26|15   |   5:56   |   (0) comments


Most everything is now connected. And along with 4K and 4G technologies, everyone could be creating and broadcasting video contents. Users are expecting better video experience with any screen, anywhere and anytime. Operators will meet new challenges, but also see some big opportunities.
LRTV Custom TV
JDSU: Delivering Dynamic Networks for a Personalized Experience

3|26|15   |   5:59   |   (0) comments


Light Reading speaks to JDSU at Mobile World Congress 2015 about new solutions in the areas of HetNets, VoLTE, backhaul, virtualization, big data analytics, and real-time intelligence.
LRTV Custom TV
Smarter Service Chaining & New Ways to Benefit From Qosmos Technology

3|25|15   |   03:11   |   (0) comments


David Le Goff, director of strategic and product marketing at Qosmos, explains how the company has added application awareness to subscriber information to make service chaining more efficient and reduce costs for networking and infrastructure. In addition, Qosmos technology, which has been delivered as C libraries, is now also available as a virtual machine, ...
Between the CEOs
Qosmos CEO: The Changing Face of DPI

3|24|15   |   13:53   |   (0) comments


LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures. Also, how the comms market is becoming more like the automotive industry.
LRTV Huawei Video Resource Center
FC Schalke Scores With Its Agile Stadium

3|24|15   |   6:23   |   (0) comments


Top German soccer club FC Schalke 04 has deployed a new, agile WiFi network from Huawei in its Veltins-Arena stadium and is reaping the benefits in terms of customer satisfaction and business opportunities, explains marketing chief Alexander Jobst.
LRTV Huawei Video Resource Center
Huawei’s Insights on Mobile Video

3|24|15   |   7:51   |   (0) comments


More people than ever are now watching videos on smartphones. Seventy percent of mobile traffic will be video traffic until 2018. In this video, Huawei's exports give their insights on mobile video in terms of business model, network planning and 4G network construction.
LRTV Documentaries
The Rise of Industry 4.0

3|24|15   |   02:26   |   (9) comments


Are you ready for the fourth industrial revolution? It's a big deal for influential operators such as Deutsche Telekom.
LRTV Huawei Video Resource Center
Getting Connected With eLTE

3|23|15   |   06:04   |   (0) comments


Trunked radio communications have entered the 4G LTE world, and with Huawei's eLTE solution, can now deliver a full range of data and video services as well as push-to-talk voice, explains Huawei's Norman Frisch.
Upcoming Live Events
April 14, 2015, The Westin Times Square, New York City, NY
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
All Upcoming Live Events
Hot Topics
AT&T Woos SMBs With Small-Scale WiFi
Sarah Thomas, Editorial Operations Director, 3/26/2015
Just Don't Say IBM Is 'Relaunching' Networking Business
Mitch Wagner, West Coast Bureau Chief, Light Reading, 3/26/2015
TV Everywhere Nears Mainstream Adoption
Mari Silbey, Independent Technology Editor, 3/27/2015
Carriers Are Bright Spot in BlackBerry Q4
Sarah Thomas, Editorial Operations Director, 3/27/2015
Comcast Says TWC Deal Will Close Later
Mari Silbey, Independent Technology Editor, 3/26/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Chattanooga’s EPB publicly owned utility comms company has become a poster child for how to enable a local economy using next-gen networking technology. Steve Saunders, Founder of Light Reading, sits down with Harold DePriest, president and CEO of EPB, to learn how EPB is bringing big time tech to small town America.
Cats with Phones
Interspecies Phone Love Click Here
"No, you hang up."
"No, YOU hang up."
Latest Comment