Motorola Makes Noise

Listen up. After months of quiet, you'll hear some stirring at Motorola (NYSE: MOT  ) .

It's been nine long months since Ed Zander took the job as Motorola CEO. This week he finally made his first real move to improve the technology giant's performance, reducing headcount at three of Motorola's divisions. Frustrated investors take heart; this could be the start of much-needed fixing at Motorola.

According to a federal filing released yesterday, Motorola says it will cut 1,000 jobs and take a $50 million charge to cover severance pay costs. Most of the cuts will come from the company's solutions unit, its electronics systems division, and its broadband segment. Motorola's mobile handset unit will be left alone.

The change isn't huge, but it could offer clues about the direction of Zander's strategy. Mobile communications will likely play a lead role going forward. The future of Motorola's other units is less certain.

It's not clear whether Motorola's broadband unit, which makes set-top boxes and modems, is worth keeping. A nearly $3 billion business when acquired in 1999, it will fight to pull in more than $2 billion in 2004. Steadily losing market share to rival Scientific Atlanta (NYSE: SFA  ) , the broadband unit could go the way of Motorola's semiconductor business, spun off earlier this year as Freescale Semiconductors (NYSE: FSL  ) .

Changes could be in store at Global Telecom Solutions, which sells wireless network infrastructure. Its share of the market ranks well behind Ericsson (Nasdaq: ERICY  ) and Nortel (NYSE: NT  ) . At the same time, almost 40% of the unit's sales come from just three customers in the developing world, leaving Motorola heavily exposed to financial uncertainty in those risky markets.

While Motorola's handset business goes untouched, it faces a tough road ahead. As well as engaging in hand-to-hand combat with market giant Nokia (NYSE: NOK  ) , Motorola must fend off Samsung,which has increased the learning curve on design and production and is closing in on second place.

At $17.80, Motorola shares are priced roughly where they were when Zander took the helm. With little news until now, that makes sense. If this week's change is nothing more than a bit of rustling, Motorola's record of frustrating investors won't be in jeopardy.

Fool contributorBen McClurehails from the Great White North. Ben doesn't own any shares mentioned here.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 502137, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:38:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,221.61 52.34 0.29%
S&P 500 2,143.66 0.50 0.02%
NASD 5,275.70 -7.70 -0.15%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 11:22 AM
MSI $74.27 Up +0.11 +0.15%
Motorola Solutions CAPS Rating: ***
NOK $5.14 Up +0.17 +3.32%
Nokia CAPS Rating: **
NT.DL $0.32 Down +0.00 +0.00%
Nortel Networks Co… CAPS Rating: **
SFA.DL2 $0.00 Down +0.00 +0.00%
CAPS Rating: No stars