Motorola is the worldwide No. 2 in cell phone sales after Nokia
In terms of unit growth, Motorola is still in second place, but this time after the Sony
Motorola management seemed happy about an increased market share, but ultimately the bottom-line numbers just weren't there. So bring on the 5% job cuts. Some 3,500 Motorola employees worldwide will feel like square pegs in octagonal holes soon, as CEO Ed Zander cuts corners to improve his company's profitability. Two recent acquisitions in the enterprise communications arena also point to a new focus, bringing Motorola in more direct competition with Research In Motion
Motorola's top-of-the-line units like the RAZR, KRAZR, and SLVR have tended to be heavy on entertainment features and low on business appeal. The Motorola Q model is a step in the corporate direction, and management clearly hopes to fatten margins on the back of business-class purchasing budgets rather than penny-pinching end consumers.
The Connected Home Solutions division should become more of a focus this year, as digital entertainment and cable/telco service providers continue to improve their infrastractures. Motorola sells plenty of back-end equipment to cable companies, and new wrinkles like on-demand servers and switched digital video could raise the profile of this business unit a great deal. Motorola already announced a couple of large sales in this arena to cable leaders like Comcast
Motorola clearly has some challenges to overcome, but it remains solidly profitable and is defending a lot of turf already. I think management has seen the high cost of chasing unprofitable sales for the sake of market share, and might let up somewhat on that strategy. The newfound enterprise focus certainly hints as much. I'd be surprised if margins stayed flimsy for very long, though sales growth might slow down a bit. You can't win 'em all, guys.
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Fool contributor Anders Bylund holds no position in any of the companies discussed here, and he just canceled his cell phone plan. You can check out Anders' holdings if you like, and Foolish disclosure always gets you a strong signal.