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Technology Stocks : Motorola (MOT)
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To: Eric L who wrote (2798)3/22/2007 11:02:06 AM
From: slacker711  Read Replies (1) of 3436
 
I never thought this one would live up to expectations ...

I was definitely wrong on this one. I figured the battery life and cheap price would open up some new customers in developing markets.

Still, the magnitude of the miss means that the Motofone alone isnt the problem. They somehow managed to screw up every tier of the market. It is unbelievable how quickly they went from double digit handset margins to -5%. The handset business is just brutal when you dont have the right products on the shelves.

I dont particularly like Zander's response to this crisis. Quite a few comments on extracting every dollar (or even 10 cents) out of their handset costs. That's fine if those cost savings are a result of extracting consessions from your supplier or moving to a cheaper platform, but some analysts have been talking about Motorola transitioning to cheaper (plastic) parts in their handsets. It took years for Motorola to get their brand back but they can ruin it in just a few quarters by rolling out some cut-rate products.

Slacker
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