Motorola aims to produce more phones
A small profit? More phones?
Are we talking about the beleaguered Motorola Inc.?
The Schaumburg-based company Thursday posted a $4 million profit in the second quarter, compared to a $28 million loss the year before, and promised to debut 34 new phones - twice as many - in competitive price ranges, styles with high speed and new touch-screen smartphones.
And Motorola aims to do it with about 10,000 fewer workers than last year. The company declined to break out where those jobs were eliminated.
"We have restructured our engineering groups and combined our hardware and software teams together, which has improved our line of sight and coordination," Motorola CEO Greg Brown said during an interview. "We've created more efficiencies and more products."
Motorola has been sliding for more than a year as its global dominance as a mobile phone maker weakened, shares dropped, losses mounted and customers complained about the lack of innovation. Earlier this year, shareholder pressure forced Motorola to say it would spin off its Mobile Devices business, now possibly by fall 2009, and focus on its other network and government equipment businesses.
But getting rid of the Mobile Devices business doesn't mean Brown has given up on it.
"It's still an important part of Motorola," Brown said. "Whether it stays as part of Motorola or is spun off, we're still fully committed to it."
But more work is needed to produce compelling products again and to turn around the company, Brown insisted.
"We're going to make sure we provide price points that are more appealing than our competitor's alternatives and we plan to work more closely with service providers to co-promote and market them," Brown said. He said there are no plans to open Motorola-branded phone stores.
The rising stars in the company continue to be the Home and Networks Mobility business, which rang in $2.7 billion in sales, up 7 percent, compared to a year ago. Also, Enterprise Mobile Solutions saw sales at $2 billion, up 6 percent.
Overall, the company posted fewer sales, $8.1 billion, compared to $8.7 billion for the same period a year ago, dragged down by woes in the Mobile Devices business.
Mobile Devices, the heart-and-soul of Motorola, continued to see sales slide to $3.3 billion, down 22 percent, compared to a year ago.
Still, it shipped more handsets, about 28.1 million, compared to 27 million during the first quarter and just enough to barely maintain its No. 3 spot worldwide ahead of LG Electronics. One of its best-sellers was the W755, part of the low-end, less expensive phone line, that sold for $19.99 by Verizon Wireless, Brown told analysts during a conference call.
Wall Street analysts braced for bad news were instead surprised. Some felt the free-fall has ended and a turnaround in sight.
"The value of its core business (mobile phones) still needs to be shored up a bit," said Mark McKechnie, telecom analyst with American Technology Research.
To turnaround its handset business it needs both new handsets to drive revenues and an improved cost structure to drive profitability," said Rick Franklin, telecom analyst with Edward Jones. "(Today's) results and announcements suggest it may be moving in the right direction," Franklin said.