With its quarterly earnings call Thursday, Motorola leaders are likely burning both ends of the proverbial candle. The company is still juggling an influx of new executives, dealing with morale issues following layoffs and readying plans to resurrect the handset maker in an industry that demands ingenuity and rewards innovation.
The quest is formidable as those two elements — ingenuity and innovation — have proved elusive for Motorola (NYSE:MOT). Industry watchers aren’t convinced that even big news this week — whether it’s announcing a CEO for the soon-to-be split off handheld division or a blockbuster product — can pull Motorola from its continuing slump.
The big question is what’s in store for a company wrestling with all these issues, as well as a patent dispute with industry leader Research in Motion and a rumored suitor, Videocon, which is eyeing Motorola’s beleaguered handset unit.
On the personnel front, Motorola outlined the latest executive moves made in the past two weeks in an email to InternetNews.com. Rob Shaddock will lead consumer products; Bruce Brda will now lead worldwide sales and operations; Todd DeYoung has been tapped for the portfolio management process as well as continue to lead strategy, applications and services.
The role changes are a continuation of similar leadership moves over the past few months. One of the biggest was the exit of Stu Reed, who had run the mobile unit. Other changes have included Paul J. Liska replacing Tom Meredith as executive VP and CFO, and Kenneth Keller leaving his job as chief marketing officer.
The one thing Motorola has cleared off its plate is a fight with shareholder Carl Icahn. Icahn had filed suit to gain more control over mobile device decisions and get his handpicked people on the corporate board. Motorola caved to both those demands in short order.
Motorola told InternetNews.com it will not comment on rumors — meaning the potential handset unit sale to Videcon, and that the search for a CEO for the handset unit is continuing.
While declining repeated requests for an interview, a spokesman did provide a written statement of “steps taken” and insight on mobile handset strategy:
“We are driving ahead with our plan to create two independent, publicly-traded companies well-positioned for standalone success. Our priority is to improve the performance of our Mobile Devices business and regain our leadership position in the industry by consistently delivering compelling new products.”
A product-led recovery?
Ongoing organizational realignments are geared to “simplify” structure and “reinforce accountability,” said Motorola, with the goal tied to “executing a product-led recovery.”
A “product-led” recovery is the one thing industry analysts agree is needed when it comes to Motorola’s future. What they don’t agree on is how fast, or even if such a recovery will come to pass. One thing’s certain though there’s more work ahead, according to industry watchers.
One telecom analyst predicts more layoffs related to spinning off the handset division, but acknowledges the cuts can’t go too far.
“Deep, sustained cuts will severely compromise the ability and willingness of those who remain to turn the company around,” Carmi Levy, senior VP, strategic consulting, AR Communications, told InternetNews.com.
Analyst Jack Gold also expects further cuts and paints a darker future than Levy.
“Since a pretty large share of business is in North America, the troubled economy should continue to drag on overall sales and profitability,” the analyst told InternetNews.com, predicting that a turnaround will be a “matter of years, not a matter of months.”
Another pundit, however, has a bit rosier view.
“Motorola has a long path to recovery ahead of it, however I see the future of the company being a lot brighter than just a few months ago,” telecom analyst Jeff Kagan told InternetNews.com.
“[CEO Greg] Brown seems to have a good understanding of the troubles,” he said, adding the “problems were related to a number of issues, mainly people and decisions,” and that with the “right people and decisions” he believes Motorola can regain traction.
Levy isn’t quite as convinced.
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“Those just-announced leadership changes in the mobile devices division aim to stem the tide of departures and fuse existing leadership to the company’s evolving vision,” he said. But looking ahead, he said, “the strategy will only succeed if promoted leaders stick around to finish the job.”
The one thing analysts do agree on is that Motorola needs a blockbuster product and they need it fast.
“The product roadmap for the rest of the year shows a range of evolutionary products, but, tellingly, no breakout products and nothing that will capture the attention of the market,” said Levy.
“Motorola’s product designers need to swing for the fences, but they seem to be content with singles and doubles,” he said.
Gold isn’t holding his breath for any product news this week.
“I do expect some new product to be announced shortly but I think it may be a bit too early to see it this week,” he said. “I do think you will see a continued slide in their market share numbers, as competitors offer more compelling devices, particularly at the high end where the best margins are.”
No matter what’s announced Thursday, the news likely won’t push Moto’s stock soaring upward, said the analysts.
“The problems cannot be fixed in the first few months, but they can be fixed, and so far I like what I see,” said Kagan..
