Ailing Motorola shuffles businesses

News comes in wake of slower cell-phone sales

A troubled Motorola Inc. has realigned itself as its critical cell-phone business slows down.

The company sketched out the reorganization in a U.S. Securities and Exchange Commission filing yesterday, two days before it is set to announce its second-quarter financial results. Last week, Motorola slashed its earlier revenue forecast for the quarter and predicted a larger loss, blaming lower phone sales. It also named a new chief of its mobile unit, Stu Reed. Other recent changes in the executive ranks have also rocked the company.

Motorola is now divided into three divisions: Mobile Devices, Home and Networks Mobility, and Enterprise Mobility Solutions.

The company is moving its Good Technology mobile e-mail software business from the Mobile Devices division into Enterprise Mobility Solutions. Its carrier equipment business has been combined with home broadband products in the Home and Networks Mobility segment, with the new enterprise unit focusing on private network products.

The Home and Networks Mobility group is responsible for set-top boxes and digital video systems for carriers, home Digital Subscriber Line and cable modems, and wired and wireless broadband network gear.

The Enterprise group encompasses analog and digital two-way radio and other voice and data communications systems for government, businesses and Motorola's large public-safety customer base. Good Technology, which Motorola acquired in a deal completed in February, is a mobile messaging platform with enterprise features such as centralized lockdown of unwanted applications on the phone. It competes against Research In Motion Ltd.'s BlackBerry system and Nokia Corp.'s Intellisync technology.

After the rousing success of the slim Razr handset, which started out as a premium-priced bauble and quickly became a mass-market commodity, Motorola has had trouble coming out with an encore. A Razr 2 is expected later this year. New handsets from Nokia, Samsung Electronics Co. and LG Electronics Inc. had stolen the spotlight even before Apple Inc.'s iPhone, which debuted June 29, became the talk of the industry.

Meanwhile, sales for all makers have stagnated in higher-priced markets such as North America and Europe while rising in lower-priced India and China, according to industry analysts.

Last Wednesday, Motorola said it expected to report 35 million to 36 million handset sales in the second quarter, down from 45.5 million in the previous quarter. Its revenue forecast dropped from $9.4 billion to between $8.6 billion and $8.7 billion. The company now expects to lose between 2 and 4 cents per share in the quarter.

Copyright © 2007 IDG Communications, Inc.

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