Hold the phone, Motorola

Janet Babin Mar 22, 2007


SCOTT JAGOW: Cell phone maker Motorola is supposed to be on the comeback trail with its Razrs and Krzrs and what-not. But this morning, the company said profits and sales could be much lower than expected this year. Janet Babin reports from our Innovations Desk at North Carolina Public Radio.

JANET BABIN: Motorola blamed the losses on falling cell phone prices.

But some analysts say that’s like blaming the problem on gravity: More than a billion cell phones were sold last year. With volume like that, prices were bound to come down.

And Motorola reacted too slowly. Telecom analyst Jeff Kagan says the company was riding high on sales of its Razr phone, that initially sold for $500 but . . .

JEFF KAGAN: Now you can pick it up for $50, you can pick it up for $25, it’s nothing special anymore. Everybody sells them. So they have to come up with a Plan B and Plan C and that’s way late, they’re way late for that. They can still recover, but now it’s going to be a lot harder.

Motorola said it will reshuffle top management, cut 3,500 jobs and take other steps to reduce costs.

Under pressure from activist investor Carl Icahn, the company said it will also buy back more of its lagging stock.

I’m Janet Babin for Marketplace.

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