updated 09:35 am EDT, Thu October 30, 2008
Motorola Q3 2008 Results
Motorola today saw its problems mount with news of its summer quarterly results. The company swung from a $60 million profit at the same point in 2007 to a $397 million loss this year due almost exclusively to poor performance from the Mobile Devices group and its cellphone business. Phone shipments plunged a sharp 32 percent year-over-year to 25.4 million handsets and also the company's gross margin on phones dip from 28.4 percent to 24.1 percent as the mix shifted towards lower-cost devices.
The company said the rapidly shrinking cellphone performance will push it to consolidate its efforts, including a greater emphasis on smartphones and 3G-capable devices, moving some of its higher-end production from outsourcing to in-house and delaying its planned spin-off of Mobile Devices into a separate company. The breakaway of the mobile group now isn't slated until summer 2009 as Motorola plans to improve the division's health before the breakup.
Motorola has also been too heavily focused on "bright shiny objects" as opposed to the software experience, Mobile Devices chief Sanjay Jha says. He acknowledges that the iPhone is performing better in the market than Motorola's high-end devices but that future phones based on Android and the unannounced Windows Mobile 7 should bring the cellphone maker closer on par. Certain features of Windows Mobile 7 should help, Jha says, without explaining what these might be.
Plans for a first Android phone have been reiterated but have also been set back from some unofficial expectations; a phone based on the Google mobile OS now isn't due until summer 2009, or nearly a year after HTC's T-Mobile G1 has reached stores.
Motorola's cellphone numbers have let the company slip behind Sony Ericsson in cellphone sales despite the latter's own loss and puts the company only slightly ahead of LG, which shipped 23 million phones during the same period. Samsung comes in a much stronger second place at 51.8 million phones and itself is eclipsed by Nokia, which shipped 117.8 million.
US-based Motorola has continued to hold on to the top spot for individual handset sales with the RAZR but has struggled to achieve any similar success with its other devices, which have been easily eclipsed by the iPhone as well as BlackBerries and other high-end competitors.