Americans love a good comeback, whether it's the Steelers pulling off a Super Bowl win in the final minute or Mickey Rourke snagging an Oscar nomination for The Wrestler. But for U.S. corporations, clawing your way back to the top is harder than ever.
For once-mighty Motorola (MOT) , it might well be impossible. Given the current economic climate, the company's plummeting cell-phone sales threaten to drag down its profitable divisions.
That leaves Motorola (Stock Quote: MOT) with some tough choices. When your business is on life support, layoffs and budget cuts alone don't cut it. Like Motorola, you may be forced to re-evaluate your entire business model, shedding units and products that don't measure up.
(MOT) Can Motorola pull it off? Could you?
A decade ago, Motorola seemed perfectly positioned to take advantage of the booming cell-phone business. For years, its Razr was the best-selling handset in the U.S. But this week, Motorola announced that fourth-quarter sales fell 26% from a year earlier. Cell-phone sales dropped by half.
(MOT) Just as punishing to the company's self-esteem was the news that Apple's (AAPL) iPhone (Stock Quote: AAPL) edged out the Razr as the best-selling phone in the U.S. According to the NPD Group, which released the sales numbers, four of the five best-selling handsets were optimized for messaging and other advanced Internet features. The only one that wasn't? The Razr.
(MOT) (AAPL) Motorola rushed to show that it's taking aggressive action, announcing savings of $1.5 billion for 2009 and suspending its dividend. But news that the company's CFO is leaving, without a successor in place, didn't exactly instill confidence. And more rounds of layoffs will further demoralize an already beaten-down workforce.
At the high end of the market, Motorola's designs didn't keep up with consumer expectations, and the game-changing iPhone set back the company further. Motorola also got squeezed out by competitors at the lower end, where the cell-phone business had the most potential for growth globally.
Motorola's move toward a smartphone is a last-gasp, swing-for-the-fences move. It may pay off big, or it may drain money and time to little effect. "Android is not a competitive advantage," Summer says. "It can't be the only thing that turns them around."
For decades, Motorola was an engineering-focused company that was, to be honest, somewhat boring. Then came the Razr, and the company hit the tech big time. Giving up its signature product would be a blow, but it may be the only way to salvage the rest.
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