Moto disappoints with Q2 warning
12-07-2007
by The Register

Motorola is forecasting another dreary quarter, citing poor sales in Asia and Europe for its lower-than-expected outlook.

Meanwhile, Motorola shares have risen almost 3 percent on speculation that CEO Ed Zander may be ousted under the heat of a new campaign by an activist investor.

The company's profit warning on Wednesday declared it now expects second quarter sales between USD8.6 billion and USD8.7 billion. The company had previously forecast sales would be flat with Q1 2007 results of USD9.4 billion. The company has also changed its outlook on the mobile market from the first quarter, and no longer expects the business to be profitable for the full year 2007.

This week, Motorola investor Eric Jackson published a statement entitled "Motorola Plan B" that called for Zander's head.

"What has been Ed Zander's mark on Motorola?" Jackson asked in his statement. "He came with a Silicon Valley background, but how has that experience or those past ties translated into tangible results for the Schaumburg, Illinois-based Motorola?

"What has he brought to Motorola that is really unique in the last three and a half years? If it's difficult to answer that question, we find it hard to imagine what he'll bring moving forward, which is why we suggest a change is needed now."

Jackson had previously stirred up dissatisfied stockholders at Yahoo by asking then-CEO Terry Semel to apologise to shareholders during the company's annual meeting. Semel was replaced one week later.

This year, Motorola has replaced its CFO and acquired an operations chief to help with company restructuring. The company slashed 3,500 jobs in January, followed by an additional 4,000 layoffs in May.

In addition to the forecast, Motorola announced that Stu Reed, head of integrated supply chain operations, would become the company's new executive VP of mobile devices. Reed takes the job vacated by Ron Garriques, who left the company in February to become an executive at Dell.

The Register and its contents are copyright 2007 Situation Publishing. Reprinted with permission.