Motorola cuts Q1 estimate, shakes up management
Motorola replaced its president and COO while warning that sales would be lower than expected.
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Thursday, March 22, 2007; 12:32 AM
Motorola Inc. replaced a top executive and warned that sales would be lower than expected for the quarter and the year.
The number two cell phone maker said that sales for the first quarter of 2007 would be in the range of US$9.2 billion to $9.3 billion with earnings to be a loss in the range of $0.07 to $0.09 per share. Motorola had expected sales between $10.4 billion and $10.6 billion.
Greg Brown will immediately take on the role of president and chief operating officer. He was president of the networks and enterprise business.
In addition, Thomas J. Meredith will become acting chief financial officer starting April 1 and David Devonshire, previously CFO, will retire.
In a statement, Ed Zander, chairman and chief executive officer of Motorola, called the performance of the company's mobile devices business "unacceptable." Returning the business to better performance will take more time and a greater effort than previously thought, he said. Zander recently abruptly cancelled his scheduled appearance at the upcoming CTIA Wireless show, one of the biggest mobile phone conferences of the year.
Motorola blamed the revised guidance on lower sales in the device sector caused by a difficult pricing environment, particularly in low-end products. Volume sales dropped because Motorola decided not to match low competitor prices in emerging markets where low-priced phones are selling well, the company said. A limited 3G product portfolio was also to blame, Motorola said. The mobile devices business is expected to report a loss for the first quarter, Motorola said.
