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Analyst Suggests Motorola May Exit Handset Business

Analyst Suggests Motorola May Exit Handset Business

January 29, 2008

By: Christopher Meinck

Richard Windsor, an analyst for Nomura International, told his clients that instead of handsets, Moto may choose to refocus on becoming an "enterprise and government company". He further speculated that a Chinese company might purchase Moto, before backtracking calling it "unlikely as those vendors don't have much of an idea how to fix Motorola's problems."

While it's clear that Motorola has hit a rough patch with their mobile phone sales slumping, new CEO Greg Brown reiterated the companies focus on recovery when he spoke with investors earlier this month. "The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done," said Brown.

While certainly newsworthy, there doesn't appear to be any validity or evidence supporting Windsor's claims. The mere fact that analysts are mentioning this scenario does reinforce that Motorola needs to innovate in light of increased competition in the mobile sector.

Source: EngadgetMobile.

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KOOLWATER said:

	What does this mean for us Q users? No future Q's? I was looking forward to seeing a touch screen Q one day...Dang... If this is true, I guess it was good while it lasted.
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January 30, 2008
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semicolon said:

	I really doubt that Moto would get out of the handset business.
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January 31, 2008
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VV said:

With the economy tanking or at least slowing more than expected what do these CEOs, analysts and investor THINK is going to happen. A company like Motorola agressively floods the market with wireless handsets, and now is bewildered when sales start to slump. With each industry comes a saturation point. A business model based on continuous product turnover is not a realistic one when consumers start to slow spending in the face of uncertain economic times. Suddenly, having the hot new toy isn't as desirable particularly when consumers have to wonder if they'll make the next mortgage, rent or car payment.

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January 31, 2008
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rob3530 said:

	semicolon said: "I really doubt that Moto would get out of the handset business." IBM got out of the personal computer business, turning it over to Lenovo, so I guess anything's possible. Is it probable though, that's the question!
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January 31, 2008
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vijay said:

	Yes.. IBM did sell its computer business.. but keep in mind that IBM was making most of its revenue from Services wing. Motorola make more than 60% of its revenue from Mobile Devices.. Selling a part of company is one thing.. and selling majority of the company is another thing..
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February 21, 2008
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Tom Secreto said:

Minor correction to vijay's post on IBM selling it's computer business.

IBM DID sell it's PC division to Lenovo stating that it did not want to be in the commodity business rather focus on innovation. IBM still is the leader in Server sales and mainframe computers that have been on the rise, while services represents about 1/3 of the companies sales Hareware and software remain the balance. And no I do not work for IBM or own stock positions in IBM, I have just been a customer and a long time IBM Business Partner.

My own opinion of the cell phone market in general is that as the market keeps getting bigger so does the competition. Motorola will have to get more innovative and price competitive, they do make almost all of Nextel phones.