Motorola to restructure after 2007 disappointment

4 Feb 2008

Motorola has announced it is looking into ways to restructure the company in order to regain market share in the mobile handset sector.

One of the options the company will investigate is separating its mobile devices division from its other businesses in order to permit each business to grow and better serve its customers.

Motorola had a disappointing year in 2007, posting full-year revenues of US$36.6bn, down from US$42.8bn in 2006. The fourth quarter of 2007 saw a 84pc drop in net profits.

Sales in the mobile devices division were down 38pc on the previous year at US$4.8bn, despite the introduction of nine new phones during the last quarter of 2007.

Samsung overtook Motorola during Q407 in terms of handset shipments, taking the No 2 vendor slot for shipments.

Motorola’s other divisions performed solidly with the home and networks mobility division reporting an 11pc increase in sales to US$2.7bn and the enterprise mobility group reporting a 35pc increase in sales to US$2.1bn.

Motorola CEO, Greg Brown, pledged on the back of the poor showing that the company would aggressively rationalise its cost structure to get mobile devices back on track. Motorola committed to this process last week by announcing a review of the company’s internal structure.

“All of our businesses have exceptional people, products and intellectual property and the ability to achieve category leadership in their markets,” said Brown. “We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realise the value of this great franchise.”

The company will not discuss developments with respect to the exploration of strategic alternatives unless or until its board of directors has approved a definitive transaction or the process is otherwise complete.

By Niall Byrne