The figure, in line with expectations, reflects last year’s collapse in many of Motorola’s major markets. The restructuring process that began last year (which has already brought positive results in mobile handsets), combined with recoveries in some infrastructure markets, should bring a far better 2002. The semiconductor unit’s future, however, looks bleak.
US telecoms firm Motorola has reported a $697 million annual operating loss for 2001.
US telecoms firm Motorola announced on Tuesday that its operating loss for Q4 2001 was $90 million, taking its annual loss to $697 million. The annual loss including charges was $3.9 billion – in line with expectations.
Motorola is in the middle of a transition period. It has shed 35,000 employees since last summer, and is implementing another 9,400 cuts announced in December. Most of the exceptional charges are down to the effects of this restructuring program. But is it starting to impact results?
The mobile handsets unit did well: it made a $189 million profit, up 128% on the same quarter last year. However, telecoms solutions made an operating loss of $120 million, and broadband equipment profits fell by 47%. The semiconductor unit showed a loss of $171 million.
Mobile handsets are a bright area. Revamping this unit to focus on consumer demand has paid dividends, driving margins up without losing much market share. Motorola’s focus on new technology has also helped: it was the first handset maker to have a GPRS phone on the market and it is also beginning to incorporate Java (J2ME) technology into its terminals.
The two infrastructure units are hurting due to the industry downturn: operators spent 2001 cutting back on infrastructure spending. This year, broadband still looks gloomy, but mobile infrastructure is showing signs of a rebound. Motorola’s weak position in 3G solutions could be a worry for the future, but (especially in the US) there is still time to turn this around.
This leaves the semiconductor unit. At the best of times, it is low-margin and doesn’t look likely to recover anytime soon. It isn’t an industry with which a firm like Motorola, with an increasingly consumer-focused ethos and brand image, has major synergies.
The results confirm that Motorola is starting to turn itself around, led by the handset division. This should continue into its other telecoms divisions. Outside semiconductors, the company looks set for a decent year.