Analysts believe that Motorola (MOT) may have dropped into fourth place among the world’s handset manufacturers. Two years ago, it was a strong second with 22% of the market.
According to Reuters, "Nine analysts surveyed by Reuters estimated Motorola sold 26.6 million handsets in the quarter, behind LG’s 27.7 million, Samsung Electronics Co Ltd’s 45.7 million and Nokia’s 122 million." Motorla’s actual unit sales came in at 28.1 million for the quarter
Motorola plans to spin-off its handset business, leaving its set-top box and enterprise divisions as a new company. At this point, there is little reason to believe that the handset operation has any value at all. "The handset business needs to achieve profitability before it can be spun off," said Kaufman Bros. analyst Raimundo Archibold. "Who’s going to want to own a company that’s bleeding money … We need to gain some sense the losses can be tempered."
The problems with shrinking revenue and rising losses at the unit will almost certainly mean that Motorola will have to delay or cancel pushing it off to shareholders. The handset division had second quarter sales of $3.3 billion, down 22 percent compared to the year-ago quarter. The segment reported an operating loss of $346 million, compared to an operating loss of $332 million in the year-ago quarter.
Motorola’s earning were a bit better than expected, but the shinking handset unit cannot be spun off. It has no value.
Douglas A. McIntyre
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