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Earnings Report: Motorola (Ouch!)

January 23, 2008 in Wireless Industry News

Former #2 phone manufacturer Motorola reported its earnings today, and it sure wasn’t good. Among the highlights:

RAZR2

The RAZR2 wasn’t such a hot seller after all.

  • 84 percent decline in profit
  • Market share fell to 11.9 percent
  • 40.9 million phones shipped in the fourth quarter
  • 5-7 cents per share loss for Q1 2008 (compared with expectations of 9 cents a share profit)
  • Qualcomm’s 3G chips will start appearing in new handsets
  • Cost cuts of about $500 million to come, mostly from mobile division

Ugly. But Motorola does have a new CEO (Greg Brown) after Ed Zander was booted from the job earlier this month.

The big problem isn’t that Motorola’s phones are horrible. They aren’t. The latest RAZR2′s are on par with Nokia’s mid-tier devices, although they cost more. The real issue is branding. The RAZR, while it was cool three years ago, now has this negative stigma associated with it and any similar sounding products (KRZR, ROKR, SLVR). Motorola’s going to have to get rid of that name and start over if it wants to stay competitive with everyone else. And that brings us to issue #2: the company doesn’t have a high-end phone or any device that can evoke some kind of emotion. And by this I mean something on par with Apple’s iPhone, HTC’s Touch or Nokia’s N95. Even something along the lines of the 8800/8600 series of Nokia phones that aren’t exactly the most technologically advanced handsets would suffice.

Anyway, until Motorola fixes one or both of these problems, it’s going have a hard time no matter how you look at it.

Motorola sees loss on struggling mobile unit – Reuters

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