Doom and gloom for Motorola

Ed Zander’s usual smile must have been somewhat forced on Thursday, as the CEO of Motorola reported that net loss for the second quarter plummeted to $28m, down from a profit of $1.4bn in the same period last year.

Revenues dropped from $10.8bn a year ago to $8.7bn, as the company’s mobile handsets unit continued its downward trajectory.

Motorola shipped just 35.5 million units during the second quarter, down from 51.9 million in the same period last year. But perhaps the most telling evidence of weaknesses in the company’s product line comes from the fact that the vendor is still going on about the RAZR. Now Moto has shipped its 100 millionth device apparently.

Of concern to some industry watchers is the fact that the only device that Moto has pitched as successor to the RAZR is the unimaginatively titled RAZR 2, which started shipping in the second quarter.

“This was a challenging quarter for Motorola in which revenue fell short of our expectations due to a decline in mobile device unit shipments,” said Zander. No kidding.

Sales in the Mobile Devices segment were $4.3bn, down 40 per cent compared with the year ago quarter. The unit incurred an operating loss of $264m, compared with operating profit of $804m a year ago.

“Our efforts are focused on improving cash flow from operations and enhancing profitability,” said Tom Meredith, chief financial officer. “In addition to cost controls and headcount reductions, which we expect will result in cost savings of $1bn in 2008, we intend to significantly improve our cash conversion cycle and our return on invested capital,” he said.

So far this year, the firm has eliminated 7,500 jobs, not counting those of its CFO or the head of mobile devices. Although Carl Icahn’s attempt to force his way onto the board was repelled, the shareholders are predictably unhappy. Earlier this month, a prominent investor, Eric Jackson, publicly called for CEO Ed Zander to be fired.

Earlier this week the company moved to realign its operations to try and give it a fighting chance in the market.


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