Motorola (MOT) may be close to finding a new CEO for its handset division. It is his job to do what two generations of management before him could not. He is being asked to reverse the slide in sales of the cellphones that Motorola makes. His job will be harder than those of his predecessors. The company’s market share of global handset is down to 10% from 22% two years ago. Competition is worse as Nokia (NOK), Apple (AAPL) and others kick MOT while it is down.
It does not do anything to disparage garbage haulers to say that one of them could run the Motorola handset business as well as a consumer electronics executive. The unit is in such a bind, that it probably cannot get out. According to The Wall Street Journal, MOT "Chief Executive Greg Brown is desperate to find a manager to turn around Motorola’s mobile-devices division, which has lost $1.6 billion since January. 2007."
While Motorola has flailed, its rivals have introduced successful products at both ends of the handset market. Samsug and Apple has been especially strong in the high-end smarphone business and Nokia has put out more and more inexpensive products for the emerging markets.
Motorola has a market cap of $20 billion. Based on their operating incomes, the company’s enterprise and home products divisions could be worth at least that. What is the remaining handset operation worth? Next to nothing. And, it will require at least $2 billion as a standalone company because its losses will go on for at least several quarters.
The odds of fixing the firm are similar to those of drawing to an inside straight.
Douglas A. McIntyre
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