Motorola Issues Profit Warning Due to Poor Mobile Sales

[Mike Temporale]

<div class='os_post_top_link'><a href='http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyid=2007-01-05T120506Z_01_N04371264_RTRUKOC_0_US-MARKETS-STOCKS.xml' target='_blank'>http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyid=2007-01-05T120506Z_01_N04371264_RTRUKOC_0_US-MARKETS-STOCKS.xml</a><br /><br /></div><i>"U.S. stock futures fell on Friday after a profit warning from Motorola Inc. and as investors braced for key December payrolls data. Motorola, the world's second largest cell phone maker, late on Thursday warned investors its quarterly results would disappoint due to a shortfall at its mobile devices unit. Its shares fell more than 5 percent in Europe, and analysts said the news could weigh on tech shares."</i><br /><br /><img src="http://www.smartphonethoughts.com/images/Motorola.jpg" alt="User submitted image" title="User submitted image"/> <br /><br />Unless you're holding Moto shares, I don't think this news effects anyone too much. While the cause is pinned on mobile device sales, it can't be said that the Q was the main cause. The Q is still a big seller and a trend setting device. Even if they haven't managed to get a GSM version out yet.

[Jerry Raia]

I'm no expert but the they needed to do more than make the Q and then just sit back and relax. HTC and Samsung don't ever seem to rest. They are doing pretty well aren't they?

[alese]

Considering that all Motorola did in last year was reusing it's Razr design for "normal" phones and released black Q (and still no GSM version), I guess it's not that bad.

[Kris Kumar]

"Motorola launched a music phone called the ROKR, a rounded phone called the PEBL, and the SLVR, a candy-bar shaped phone, to meet demand outside the U.S. for a nonflip phone. It entered the market for handheld email gadgets with the ultrathin wireless email device "Q."

But with these new launches came signs that Motorola hadn't fixed its historical troubles with production delays. The PEBL (pronounced "pebble") and the SLVR (pronounced "sliver") were launched too late in 2005 to meet the bulk of Christmas demand. ROKR (pronounced "rocker") sales were weak, and the company soon launched a new version. And the price of the "Q" was quickly lowered amid a slew of competing offerings. Verizon Wireless first offered the Q at $200, but slashed the price in half a few months ago, with Motorola eating most of the cost, a person familiar with the matter said. Although the RAZR sold tens of millions more phones that the company had anticipated, the operating margins of its handset division grew slowly and lagged behind those of Nokia."

According to WSJ, Motorola's competitors are wiser and are offering better offerings. Motorola has failed to deliver on the products in terms of time and quality. It also seems like Motorola's new mantra seems to be capturing marketshare (by lowering costs) and over looking the overall profitabilty aspect.

I think the concept of giving something away for free or at lower price works when you can make money by selling something associated with, I mean accessories or refills. For example: sell printers for cheap, so that you can money off the ink refills/toner, sell games console for cheap to make money from games. But will cell phones, the consumers buying Motorola are not tied down to Motorola for ringtones, headsets etc. They should learn to make profit over the hardware they are making.

[Kris Kumar]

I agree Q's GSM version should have been launched first, but since they hit some quality problem with the EDGE chipset that were supposed to go into the GSM Q, I guess they should have tried to fix the problem quickly and re-design a new version quickly. Now Samsung, HTC and even BlackBerry is operating in the same space. And the six month exclusive deal with Verizon was a bad one. I am sure there are plenty of business folks (thanks to Nextel) on the Sprint network waiting for the Q.

A small company like HTC lauches new variation of its products every six months. Yet all Motorola can come up with is colors.

[Jerry Raia]

I thought Motorola had really turned the corner with the Q. They turned the corner and came to a screeching halt is what they did.

[alese]

Since the launch of Q, HTC relaesed I think 4-5 smartphones and even more Phone Edition devices.

This 4-5 smartphones is actually more than Motorola managed to deliver in total since the launch of Smartphone platform.

So if HTC is having recod profits and earnings every new quarter and Motorola is issuing warnings, I really wander what could be the reason...