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To: Johnny Canuck who wrote (40429)	12/5/2003 10:29:50 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69358

Motorola can't summon all parts of camera phones Last modified: December 5, 2003, 6:40 AM PST By Reuters Motorola said Thursday that it was having trouble getting new mobile phones with cameras to customers during the holiday season because of parts shortages, but analysts said the problem was poor planning. The world's No. 2 maker of cell phones said those shortages were causing slower deliveries of the hot-selling items. "We are doing everything possible to accelerate the supply of camera components," Tom Lynch, head of Motorola's cell phone business, said in a statement. Investors and analysts said the parts shortage was no excuse, and Motorola was not managing its supply chain well enough. "You could say parts shortages and it sounds like something completely out of your control, but when you're designing your handsets, it's an execution issue," said Shawn Campbell, a principal with Chicago, Ill.-based Campbell Asset Management, which owns Motorola preferred and common shares. "You should have foreseen the (strong) demand," he added. "You should have foreseen potential parts shortages, and you should have taken steps months ago to ensure you didn't have those supply chain issues." Camera phones are hot Camera phones--cell phones with integrated digital cameras that consumers can use to snap and send pictures to friends--are the hottest part of the global cell phone market. On Thursday, Qualcomm, which makes mobile phone chips, credited demand for such phones with raising its quarterly profit outlook. Motorola has introduced popular camera phones, but has experienced delays in getting some of them to some to customers such as Verizon Wireless and Cingular Wireless. "The supply constraint for integrated-camera components is an industrywide problem," Motorola Vice President Bob Perez said. "Motorola is feeling a larger impact because of the extremely limited supply of the smaller camera technology that we use for our handsets." Rivals, including Finland's Nokia, Germany's Siemens and Sony Ericsson, also have cited parts shortages as a problem. However, Nokia, the largest of the cell phone makers, seems to have been hurt less than the others. "The one company that seems to be able to deliver right now is Nokia," said SoundView Technology Group analyst Matt Hoffman, who has an "outperform" rating on Motorola and who does not own shares in that company. When it comes to the allocation of parts, Nokia stands at the front of the line, Hoffman said. Motorola spokesman Alan Buddendeck said a shortage of lenses was the main culprit in the delays, although a smaller factor was a lack of CMOS (Complementary Metal-Oxide Semiconductor technology) image sensors. "We had a primary supplier (of lenses), and they just have not been able to deliver to the level that we needed," he told Reuters. "As a result, we brought on two additional suppliers and...they are pulling out all the stops to help get us components." Motorola emphasized that the delays would not affect its fourth-quarter financial results. On Tuesday, it backed its previous fourth-quarter outlook at a Credit Suisse First Boston conference in Arizona. However, analysts said a shortage of camera phones would likely mean lost sales for Motorola and ultimately could translate to lost market share. "The reality is their handset business is really losing ground," said Sanford Bernstein analyst Paul Sagawa, who has an "underperform'' rating on the stock and does not own shares. Executives with the Chicago area-based company said demand for the camera phones is strong in North America, Europe and Asia. Motorola said that its V300 and V500 camera phones began shipping earlier in the quarter and are now available and that the V600 will ship imminently. It now has 12 camera phones available. Motorola's stock closed at $13.37, down 30 cents, or 2.2 percent, on the New York Stock Exchange on Thursday.