The Five Dumbest Things on Wall Street This Week
1. Motorola Mess
Motorola (MOT) is melting down.
The Schaumburg, Ill., tech giant stunned Wall Street late Wednesday by forecasting an unexpected first-quarter loss. Sales will miss earlier estimates by more than a billion dollars. In an echo of its disappointing fourth quarter, Motorola blamed the sharp decline of its handset business.
Recent years found Motorola riding the popularity of its ultra-thin Razr phone to huge profits. The Razr's run made CEO Ed Zander -- hired in 2003 to revive the notoriously fumble-prone company -- into a tough-talking turnaround star."We want to be No. 1," he told The Wall Street Journal in June 2005. "You've got to go to the ballfield and think about finishing first." Things haven't been going so well at the ballfield lately, though. The Razr started falling out of fashion last year, leading to steep price cuts by wireless service providers. Motorola tried to extend the Razr craze with successors called Krzr, Rokr and Slvr, but the newer phones failed to connect with consumers. The stumbles have left Motorola churning out a glut of cheap phones that no one wants. Zander, just months after pledging to cut 3,500 jobs in a bid to straighten things out, now concedes that mere firings won't be enough. Fortunately, Zander's got a plan. It calls for "prioritizing and accelerating our introduction of new feature-rich products that will give you compelling mobile experiences." The company is also listening to customers and "making sure our roadmaps are aligned." Accurate maps show Motorola on a dead end. Dumb-o-Meter score: 95. "Unfortunately, 'stop making so damn many phones' does not appear to be part of the plan," William Trent writes on seekingalpha.com. To watch Colin Barr's video take of this column, click here.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV