Motorola (MOT) lost a significant amount of stock investing value over the past year. Globally, it fell to third place. This is due to a lack of new handsets. Analysts predict it could take the entire year of 2008 to show any signs of progress due to the fact that it can take several years to create a new phone and the cost of phones are still too high. Investors stock investing in these stocks will most likely not see high returns on investment, unfortunately.
In fourth-quarter 2007, Motorola (MOT) reported a net income of $100 million, equaling to 4 cents a share. This is down from $623 million at 25 cents a share, just last year. This significant loss is attributed to sales dropping 18.2% to $9.65 billion from $11.79 billion.
Not including one-time items, Motorola (MOT) would have earned 14 cents a share. This exceeds analysts forecast of 12 cents a share on revenue of $9.64 billion. This is according to FactSet – a financial data provider.
During fourth-quarter, the handset division reported an operating loss of $1.2 billion. This is compared to a profit of $2.7 billion dollars just one year ago.
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Mobile sales accounted for 50% of total sales in fourth quarter. This is compared to two-thirds of Motorola’s (MOT) revenue in prior years. Sales for mobiles fell 38% to $4.8 billion.
Motorola (MOT) has decided not to chase market share at any cost. Instead, they are focusing on selling handsets at a higher profit. As a result, shipments have slowed down, and earnings will be hard to recover.
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Last year, the company shipped 65.7 million phones, yet generated little profit. Just one year later, the company only shipped 40.9 million wireless handsets.
Motorola’s (MOT) global shares have fallen to 13%, an even lower decline at 23% in late 2006.
Brown, Motorola’s then chief operating officer, said, “Demand for some of our products has slowed in an increasingly competitive market.”
Further steps have been taken to cut costs in an effort to lift profits, along with introducing new phones into (MOT) the market.
Brown also said, “Our primary focus is on improving profitability and enhancing our product portfolio in this business.” This being done will hopefully develop high returns on investment for stock investing investors.
Motorola’s (MOT) did better in its other business divisions. For example, the company’s home and network-mobility division revenue increased 11% to 2.72 billion. However, operating profit dropped 13.9% to $192 million.
Revenue also grew 35% to $2.14 billion in its third major division called enterprise mobility. The operating profit increased 39.6% to $451 million.
Some investors, such as Carl Icahn, feel that Motorola (MOT) should be split into three parts. However, some analysts do not agree with this investing strategy. They feel that splitting them up will not provide a solution to their problem. It was reported by Maynard Um of UBS that the three major divisions of Motorola (MOT) would likely have a tougher time as a stand-alone entity.
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[tags] FactSet , Carl Icahn, Maynard Um, UBS, MOT, Motorola Inc., covered call strategies, high returns on investment, investing in stock options, poweroptions, stock investing, stock market help, stock market investment strategies, stock options [/tags]