In the midst of a reorganization of its handset business, Motorola posted a $397 million net loss for the third quarter and said it would cut 3,000 jobs and focus on developing phones based on Windows Mobile and Google's Android platform. In addition, the company said it would have an Android-based phone for the holiday season of 2009.
The handset division posted a net loss of $840 million, compared to a net loss of $248 million last year. The division also had sales of $3.11 billion in the quarter, down 31 percent from $4.5 billion in the third quarter of last year. The handset division shipped 25.4 million units, down nearly 10 percent from 28.1 million in the second quarter and down from 37.2 million units in the year-ago quarter. The company reported an 8.4 percent market share in the handset business.
During this morning's conference call with investors, Sanjay Jha, who took over Motorola's struggling mobile devices division this summer and is the firm's co-CEO, said "inconsistent product planning" had left gaps in the handset division's business, particularly in low-tier devices and smartphones.
The company also said it has decided to delay the spinoff of the mobile devices unit until after 2009 because of the challenging macroeconomic conditions.
Jha said the company would be using Texas Instruments and Qualcomm as its primary chip suppliers for its UMTS business. In addition, the company plans to consolidate platforms by ending its in-house Linux Java platform development and stopping its work on phones that use the Symbian UIQ operating system. Instead, the company plans to send development teams to California to work on Android with Google and to Seattle to collaborate more heavily with Microsoft on bringing Windows Mobile 6.5 and 7 to phones for the second half of 2009.
"Although I have only been here a short time, I understand the challenges and the changes we need to make to address them," Jha said. "The reality is, there is no quick fix here."
Jha added that since the handset division focuses on North America, Latin America and certain markets in Asia, including China and India, and fewer products are launched in the first half of 2009, he expects to see some impact on the company's volume, but that focusing on low-tier devices as well as Windows Mobile and Android for mid-to-high-tier devices would create a richer product portfolio in the long run.
"Once we do get these platforms solidified and we start executing and delivering products, we will have much better-oiled machine in delivering products, and be competitive with other folks in the industry," he said.
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Motorola ships 28.1 million handsets in 2Q