Motorola Fires Last Ammo at Midsection
Updated from 12:50 p.m. EST
Motorola's (MOT) do-or-die mobile plan is to focus on mid-priced smartphones.
In a market split between high-demand, low-price phones in developing markets and high-end phones, the biggest growing segment of the industry, Motorola hopes to seize the opportunity in the middle.
In a bold gamble to attack this market, however, the No. 5-and-falling phone maker is teaming with Google's (GOOG) Android project for the software to run its phones.The plan is part of a decisive bid for survival at Motorola as laid out by co-CEO Sanjay Jha on an earnings conference call with analysts Tuesday. The strategy includes a huge cut in staff, an exit from the vicious competition in cheap phones and a big bet that lower-price smartphones will turn the company's fortunes around. The desperation of the plan became more evident after the company reported disappointing earnings and lower-than-expected first-quarter guidance. Looking ahead, while the company is removing more than $1 billion in costs and ending its dividend payout, it says it will end this year with less cash than the $7.4 billion it is sitting on today. As an added twist, the surprising "effective immediately" departure of CFO Paul Liska wasn't exactly the sort of financial endorsement Motorola fans were looking for. Motorola shares fell more than 11% in trading Tuesday. According to Jha, Motorola's future lies with touchscreen and QWERTY-keyboard equipped smartphones. While Motorola will continue to produce phones using Microsoft (MSFT) Windows Mobile 6 software, new smartphone development this year will use the Android system. At some point in 2010 Motorola plans to make phones using Microsoft's upcoming Windows 7 program, Jha said on the conference call.
(Photo gallery: Smart Phones )
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $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
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV