Motorola still plans to split into two publicly traded companies
Libertyville will remain an integral part of the new Mobile Devices business once it spins off from Schaumburg-based Motorola Inc.
"It will remain, undoubtedly," Motorola Co-CEO Sanjay Jha said Thursday during an interview with the Daily Herald.
Motorola's longtime plans of separating into two publicly traded companies remain in play, although a specific timetable and company name still are being discussed. Now that the economy is stabilizing and its smartphones are taking off, Motorola executives see more promise with the spinoff.
The Libertyville headquarters for the Mobile Devices business offers a vital set of skills, Jha said, although he added plans "to expand in other parts of the world to obtain other skills will be needed, too."
Motorola talked about the future of its mobile phones along with its earnings on Thursday.
Fourth-quarter net income was $142 million, or 6 cents a share, compared with a loss of $3.66 billion, or $1.61, a year ago. Profit, with some exclusions, was 9 cents a share. Sales were $5.7 billion, compared to $7.1 billion for the same period a year ago.
For all of 2009, Motorola had a net loss of $51 million, compared to about $4.2 billion the year before. The whole-year sales were $22 billion, compared to $30 billion for the prior year.
The company expects to lose 1 cent to 3 cents during its current first quarter. To offset some of those losses, the company intends to seek further supply-chain efficiencies and tightly manage expenses.
"We intend to launch six new smartphones during the first quarter and that costs money for the marketing effort," co-CEO Greg Brown said during an interview. Also, an expected decline in feature mobile phone purchases from consumers is expected to lead to a loss, which likely will be posted at the next earnings call.
Altogether, Motorola intends to launch 20 new devices this year, including half as smartphones, as the company transitions away from regular feature mobile phones, the executives said.
Smartphones are higher priced, compared to other handsets, so they have a higher profit margin that helps shareholder value. They also help promote brand recognition. But a few years ago, Motorola went too far on the other end, focusing on less-expensive phones globally that led to higher sales volume but lower profits, said Jane Zweig, CEO of The Shostack Group, a wireless industry research firm based in Columbia, Md.
"To stay at the high end would be a mistake," Zweig said. "Over time, they need to have a range of products and not make that mistake again."
Late last year, Motorola unveiled its Cliq and Droid smartphones with the Google Android platform and its MotoBlur application geared to social networking fans. Earlier this month, it began to ship the Backflip. It also released another Android phone in China and expects to do so in Korea soon.
Jha added that the company plans to enhance features on upcoming Android phones for the U.S. market that include interactive music and photo sharing.
Motorola also intends to pursue its own PC tablet, which it exhibited at the Consumer Electronics Show in Las Vegas. Apple launched its long-awaited iPad tablet this week as well.
"We remain very engaged in this," Jha said of the PC tablet. He declined to say when the product will launch or other details.
Motorola's other businesses also will play major roles in the completion of 3G and the build-out of 4G high-speed wireless services for service providers and likely will play a key role with new Motorola product launches, Brown said.
"These new devices will require an infusion of high-speed bandwidth and a bigger investment in infrastructure, so that's is a positive trend," Brown said.