Motorola: we are all doomed

Motorola’s crisis shows no sign of letting up. The world’s second-biggest mobile phone manufacturer today revised down its sales forecast for the second quarter of 2007 from $9.4bn to between $8.6-8.7bn, with the firm making another loss in the quarter. Moto no longer expects its mobile division to make a profit this year.

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. This week, a prominent investor, Eric Jackson, publicly called for CEO Ed Zander to be fired.

In the worst possible news for him, Moto stock surged 3 per cent on a rumour that this was imminent. Motorola has been struggling recently after its decision to go after the low-cost handset market went badly wrong; although the new phones weren’t cheap enough to win a distinct advantage, they did drag down the average selling price and hence margins.

Further, the huge success of the RAZRs seems to have got in the way of new product development; a serious problem, as they had notoriously poor ratings for customer satisfaction. Motorola is left with not much in the way of a smartphone lineup to compete with Nokia’s top line gadgets, the Windows Mobile world, and the dread iPhone, a mid-market business under heavy pressure from Sony Ericsson and Samsung, and a low-cost lineup being targeted by Nokia and ZTE.


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