How Tough is the Mobile Phone Market? Ask Motorola

Judging from an article in today’s Wall Street Journal, things are not looking so well at Motorola in the area of key mobile-device sales:

Telecommunications-equipment maker Motorola Inc. posted a loss for the second quarter as sales of its key mobile-device business fell by 40% from the year-earlier period, and the company declined to say how long it may take to get its cellphone business back on track.

“I don’t want to predict. I don’t think we have been necessarily good at that [in the past two quarters],” Chief Executive Ed Zander told analysts during a conference call. “We’re confident we’re doing the right things.”

The results marked the second quarter in a row the company posted a loss and the third quarter its results fell short of Wall Street expectations. Since the beginning of 2007, Motorola has been hit by worsening handset margins, a proxy fight, high-level defections and a declining stock price.

Analysts believe the latest numbers mean Motorola has slipped to third place among global handset makers, behind Nokia Corp. and Samsung Electronics Co. Just a year ago, Motorola was looking to surpass Nokia for the top spot, but the focus on market share over profit margins helped create the current problems. Motorola has since reversed the strategy to focus on improving margins. [more (requires subscription)]

Now, here’s something else from the article to bear in mind:

Motorola sold 35.5 million cellphones during the second quarter, down from 45.4 million in the first quarter and 51.9 million in the second quarter of last year.

Notice the amount of cellphones being sold in a quarter? And this is a company that’s slipped into the third spot. So, the next time you hear someone speaking of a new cellphone that’s supposed to impact the industry, do the math before taking what they say too seriously.

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