Monday, 8 January 2007

Motorola Cuts View on Cell Phone Results

Motorola is facing a dilemma with its shares plummeting by ten per cent as the company did not reveal its profit forecasts. The company is also facing reduced sales of its phones due to market competition by other phone makers, Nokia being its biggest rival hogging the number one spot.

Inspite of Motorola selling a record 66 million hansets, it has to oblige to lower prices to compat competitors prices.Motorola's new KRZR phone isn't selling as well as expected because of its high price, analysts say.

Due to the lower prices of the handsets, the company’s earnings would range from 13 cents to 16 cents a share. Motorola has seen a good market share in the last two yers because of its sleek phones, but that is not the case as of now with its competitors dishing out similar phones for lower prices.

The forecast cut "strengthens our case for the necessity for meaningful price cuts to stoke demand," Daryl Armstrong of Citigroup said.

Motorola blamed an "unfavorable geographical and product-tier mix," indicating that the company sold more low-cost phones in developing countries and fewer premium products in wealthier markets such as the US and Europe.

"We are very disappointed with our fourth-quarter financial performance, but we remain committed to the strategic direction and long-term financial targets we discussed at our annual analysts meeting," Chief Executive Ed Zander said in a statement.