Motorola Inc faces a rocky first half this year after going awry with its strategy in the fourth quarter, its chief financial officer said on Wednesday.
David Devonshire told analysts he expects the cellphone maker to recover in the second half, reiterating what CEO Ed Zander said a month ago when the company disclosed its weakest quarterly results since 2004.
Devonshire said he didn't know exactly why Ron Garriques had abruptly resigned as head of Motorola's cellphone business last week to take a job with Dell Inc, but "clearly there was a [strategy] change that needed to be made."
"The straight strategy for market share got us in trouble in the fourth quarter," he said at Bank of America's technology conference, in remarks broadcast over the Internet. "So we couldn't live with that strategy, we needed to change."
Schaumburg, Illinois-based Motorola ran afoul of investors and industry analysts with its disappointing fourth-quarter results, which it attributed to missed forecasts and errors in pricing its products.
The company now finds itself on the defensive after enjoying an unprecedented two-year hot streak because of the trendy Razr phone's worldwide popularity.
Devonshire acknowledged that one key problem was the decision to lower the Razr's price to mass-market levels, which made it and related phones less profitable.
He said that, contrary to what some observers may think, the Krazr has fared well as a successor to the Razr, selling over 2 million units in the fourth quarter and continuing to sell well.
"Even so, we've got some work to do," he said. "I think we'll have a couple of rocky quarters. I'm not looking for anything that big. I do think that in the second half of the year you'll see some improvements."
Some Wall Street analysts have said a recovery won't be quick and questioned whether the company can return to double-digit operating margins in the second half, as Zander said last month.
Lehman Brothers analyst Jeffrey Kvaal said that Motorola's handset margins were coming back slower than expected and the company's recovery was likely to take until next year.
"We believe the popularity of the Razr is likely to limit Motorola's ability to introduce new phones materially above Razr prices," Kvaal said.
Devonshire said the move to straighten out problems was "not rocket science."
"No excuses here, it's totally our fault," he said. But "if you look at the big players, they've all had their ups and downs."
RSS