Motorola Results: Strength in the Boring Businesses

Motorola (MOT) surprised investors by posting a $4 million profit for the quarter, after losing $28 million a year ago. New CEO Greg Brown must have worked awfully hard to eke that out, considering that revenue was down $700 million, dropping to $8.08 billion from $8.73 billion a year ago.

The results also shine a spotlight on what everyone misses about Moto: It's more boring, secondary businesses are actually in pretty strong positions. Its home and networks division, which makes, for instance, the set-top boxes Verizon uses for FiOS, increased revenue by 7%. The enterprise mobility unit, which makes the wireless gadgets used by the likes of FedEx drivers, had a 6% revenue boost.

Still, that doesn't yet make up for the disastrous dive of the company's cell phone division, which had been Motorola's core and drove the public's perception of the brand. The division saw revenue drop 22% in the quarter. Although, apparently Wall Street anticipated that the drop-off was going to be worse. Bill Choi, an analyst at Jefferies & Co., told Dow Jones: "Handsets weren't as bad as feared. The expectations had gotten pretty low with that division."

So it's possible that Brown has put a tourniquet on Motorola and stopped it from bleeding to death. But he still wants to split the company in two, which seemingly will leave the handset division to slowly perish, and make the rest of the company into an unexciting supplier to industrial companies and government safety entities.

Comments

[TinyTim:]

Yawn. As a disgruntled ex-employee, I find it irritating to see the Moto name on NFL headsets (excepting Belichek, who is probably plugged into the other team anyway). Hope they spare this expense along with all the payroll it must have taken to make their numbers. Also, the lawsuits against departing talent.

With the exception of General Instruments product, they regressed 70 years back to their first products, first responder radios. "...leave the handset division to slowly perish", and take Freescale with them. It's worthwhile to note that the Galvins, the founding family, are out of Moto stock completely after 3 generations.

2008 Aug 01 12:16 PM