Motorola's Troubles, Turnaround Could Benefit Competitors, Some Analysts Say
NEW YORK (Associated Press) - A variety of issues are clearly hurting Motorola Inc., and analysts think the company's efforts to revitalize its ailing handset business _ along with its current troubles _ could benefit competitors in the rapidly growing cell phone market.
Motorola, which holds the no. 3 spot in the market, has been plagued since the second part of 2006 by problems like the lack of a follow-up hit to the wildly popular Razr handset and flawed pricing and marketing strategies.
The Schaumburg, Ill.-based handset maker had a bit more than 12 percent of the market in the 2007 fourth quarter, compared with 23 percent in the year-earlier quarter, FTN Midwest Securities analyst Blaine Carroll said.
Motorola is working to revitalize its handset business and last month announced plans to split the unit from the rest of its operations, forming two publicly traded companies.
But for now, and through the split, Motorola's difficulties may be a boon to competitors, some analysts believe.
If the company's market share declines in the first quarter, Carroll said, that's someone else's to pick up.
Motorola's strength lies in the U.S. market, and analysts said handset makers like LG and Samsung could benefit from stateside weakness, as well as leading handset maker Nokia Corp., which currently has a small portion of the U.S. handset market.
Nokia has said it will make a strong push in the U.S. in 2008, Carroll said.
RBC Capital Markets analyst Mike Abramsky thinks Research In Motion Ltd. could also gain, saying in a recent client note that "Motorola's recent struggles are expected to further assist RIM share gains."
And when Motorola splits off its handset unit, the process itself could benefit Motorola's rivals, analysts agreed.
"Disruption is always good for your competitors," Carroll said, noting the unit will bring in a new chief executive and that there is potential for the arrival of a new design team.
Already, the spinoff has "clearly been a distraction" for Motorola's customers, employees and suppliers, as well as for wireless service providers, said American Technology Research analyst Mark McKechnie, who worked at Motorola as a cell phone designer in the late 1980s.
The analyst believes Motorola's business will likely suffer for the next couple quarters, until the handset unit finds a leader and a direction.
"And the other question is going to be, 'Will they find a leader soon enough, fast enough to effect a change, or is it going to be too late?'" McKechnie said.
Still, analysts note a variety of potential positives for Motorola in the wake of the split. Carroll thinks it could bring a more entrepreneurial spirit to the unit, while McKechnie predicts it may motivate employees in the company's other operations and make it more likely that the cell phone unit will be turned around.
"I think the split gives that handset division a much better fighting chance of surviving and coming back than it would have had they kept it internal to Motorola," he said.
source
Motorola, which holds the no. 3 spot in the market, has been plagued since the second part of 2006 by problems like the lack of a follow-up hit to the wildly popular Razr handset and flawed pricing and marketing strategies.
The Schaumburg, Ill.-based handset maker had a bit more than 12 percent of the market in the 2007 fourth quarter, compared with 23 percent in the year-earlier quarter, FTN Midwest Securities analyst Blaine Carroll said.
Motorola is working to revitalize its handset business and last month announced plans to split the unit from the rest of its operations, forming two publicly traded companies.
But for now, and through the split, Motorola's difficulties may be a boon to competitors, some analysts believe.
If the company's market share declines in the first quarter, Carroll said, that's someone else's to pick up.
Motorola's strength lies in the U.S. market, and analysts said handset makers like LG and Samsung could benefit from stateside weakness, as well as leading handset maker Nokia Corp., which currently has a small portion of the U.S. handset market.
Nokia has said it will make a strong push in the U.S. in 2008, Carroll said.
RBC Capital Markets analyst Mike Abramsky thinks Research In Motion Ltd. could also gain, saying in a recent client note that "Motorola's recent struggles are expected to further assist RIM share gains."
And when Motorola splits off its handset unit, the process itself could benefit Motorola's rivals, analysts agreed.
"Disruption is always good for your competitors," Carroll said, noting the unit will bring in a new chief executive and that there is potential for the arrival of a new design team.
Already, the spinoff has "clearly been a distraction" for Motorola's customers, employees and suppliers, as well as for wireless service providers, said American Technology Research analyst Mark McKechnie, who worked at Motorola as a cell phone designer in the late 1980s.
The analyst believes Motorola's business will likely suffer for the next couple quarters, until the handset unit finds a leader and a direction.
"And the other question is going to be, 'Will they find a leader soon enough, fast enough to effect a change, or is it going to be too late?'" McKechnie said.
Still, analysts note a variety of potential positives for Motorola in the wake of the split. Carroll thinks it could bring a more entrepreneurial spirit to the unit, while McKechnie predicts it may motivate employees in the company's other operations and make it more likely that the cell phone unit will be turned around.
"I think the split gives that handset division a much better fighting chance of surviving and coming back than it would have had they kept it internal to Motorola," he said.
source
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