Motorola: Still Bleeding, but New Strategies in Works

Could the next iPhone copycat come from Motorola Inc.?

Greg Brown, president and CEO of the struggling equipment manufacturer, said on Thursday Motorola will “pursue areas where we’re not competing.” Those areas, he said, include mobile messaging and touch – à la Apple Inc.’s iPhone – and developing lower-cost devices. However, he said, those initiatives remain “embryonic.”

If indeed Motorola wants to compete for iPhone-like market share, it might want to hurry. Samsung Inc., now the second-largest handset maker, earlier this month unveiled its iPhone knockoff, the Instinct. Sprint Nextel Corp. will sell the Instinct starting in June for an unannounced price, but says it will be cheaper than Apple’s $399 iPhone.

Brown didn’t say when Motorola might release an iPhone competitor and by all indications, it could take a while. Motorola is working to split itself into two publicly traded companies to eliminate the embattled mobile devices division’s drag on the rest of the company. Brown said Thursday during Motorola’s first quarter 2008 earnings call the separation won’t be finished until some time in 2009.

Motorola is trying to halt its fall from grace as a leading handset maker. Unable to follow up the wildly popular RAZR of several years ago, the company has sunk to third place behind Nokia and Samsung. Motorola released six new handsets in the first quarter of 2008, but sales still dropped – the company only sold $3.3 billion worth of mobile devices, compared to $4.8 billion in the fourth quarter and $5.4 billion in the first quarter of 2007. The mobile division posted an operating loss of $418 million.

Motorola’s two other branches fared somewhat better in the first quarter. The home and networks mobility unit, which makes HD, DVR and 4G equipment, added $2.83 billion to Motorola’s total sales of $7.45 billion. The division recorded $2.34 billion in revenue in the year-ago quarter. Similarly, the enterprise mobility solutions arm contributed $1.81 billion. That was an improvement over first-quarter 2007 numbers of $1.72 billion, but a drop from the fourth quarter’s $2.14 billion.

All told, Motorola lost $194 million, or 9 cents a share, compared to $181 million, or 8 cents a share, during the first quarter of 2007. Guidance for the second quarter of 2008 was just as discouraging. Motorola predicted it will lose 2 cents to 4 cents per share from operations. Motorola’s stocks fell on the news, down 45 cents in mid-morning trading to $9.09.

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