Friday, 23 March 2007

Motorola to Post Loss, CFO to Retire

Falling handset sales has prompted Motorola, the world’s second largest mobile phone maker to issue a revenue loss. Motorola has said that they have undergone a loss in their first-quarter revenue. The figures according to the company are way lower than the market expectations...

Falling handset sales has prompted Motorola, the world’s second largest mobile phone maker to issue a revenue loss.

Motorola has said that they have undergone a loss in their first-quarter revenue. The figures according to the company are way lower than the market expectations. As a result of the loss, Motorola said its chief financial officer was retiring and that it was appointing a chief operating officer.

The revenue for the quarter falls between USD 9.2 billion to USD 9.3 billion, compared with the previous USD 10.4 billion to USD 10.6 billion.

"This is worse than I expected. They're losing a ton of money in phones," said Edward Snyder, an analyst at Charter Equity Research.

"They need to release a set of new phones designed for lower prices, they need to design lower priced phones that are designed to be profitable at a much lower price. And that's going to take about a year and half."

"Performance in our mobile devices business continues to be unacceptable and we are committed to restoring its profitability," Chief Executive Ed Zander said in a statement.

"After a further review following the leadership change in our Mobile Devices business, we now recognise that returning the business to acceptable performance will take more time and greater effort," Zander said.

The loss in revenue is also affecting other firms Asian mobile phone contract makers, as their shares plummeted. One of the companies that were affected by this news was Motorola’s contract manufacturer Foxconn International Holdings of Taiwan.

On the other hand, it spelled happy news for rival mobile phone companies such as Samsung Electronics and LG Electronics.

"Motorola contributes 45 per cent of Foxconn's total revenue. Given the big exposure to the top phone company, it'd be a big drag. Revenue will be hurt and margins could come under pressure," said Charles Guo, a JP Morgan analyst.

Mobile phone makers led by the Finland based Nokia, Samsung, LG and the Japanese-Swedish giant SonyEricsson have increased their market shares at the cost of Motorola. These companies have released feature rich low cost mobile phones targeted at growing markets like China, India, South-East Asia.

Motorola, whose last blockbuster product was the MOTORAZR has been showing dismal show due to lack of innovative products. Though it launched low cost mobile phone in India last year, the sales are yet to pickup.