Motorola: Bigger marketshare, lower profits

• Posted: Sunday, January 21, 2007
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• Author: pradhana
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• Filed under: Market Survey, Mobile Market, Motorola

Sometimes more is less: Motorola managed to grab 4.3 percent more in handset marketshare during its fourth quarter, but suffered a 48 percent drop in net income as a result. The slimming margins on the budget-priced cell phones for emerging markets created the financial downturn, which the company warned The Street about two weeks ago.

While sales increased 17 percent year-over-year to $11.8 billion, original expectations called for a sales estimate between $11.8 billion and $12.1 billion. To offset the loss, Motorola will cut 3,500 jobs, bringing in an expected savings of $400 million over two years.

The company's quarterly results are seemingly in stark contrast to those SonyEricsson announced earlier in the week. While SonyEricsson only increased its marketshare from 8 percent to 9 percent, it still managed to increase net income threefold from the fat margins of its music phones. Motorola may be more focused on gobbling marketshare and seeding emerging markets with cheaper, albeit less profitable phones: A mile wide, but puddle-deep. So, which is a better focus: Marketshare or Margins?

Source: FierceWireless. For more on Motorola's fourth quarter read this press release

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