Electronics Weekly Electronics Design & Components Tech News
Two years ago, Motorola wanted to sell its handset division. Trouble was it was losing the best part of a billion a quarter – $840 million of losses in Q308. So the prospects for a successful sale were dim.
In the summer of 2008, Motorola recruited Sanja Jha, then COO of Qualcomm.
Jha faced a dilemma: either wind down the business and get what he could for its constituent parts, or try and make the business saleable.
He went for the second option and put between $500 million and $1 billion into new product development betting on Android.
Droid came out in Q409. Droid’s successor, Droid X, was launched in July 2010 and, last month, the successor to Droid X, Droid 2, was launched.
Q2 2010 revenue from the handset business was $1.72 billion for operating earnings of $83 million and an operating loss of $109 million.
H1 2010 revenue topped $5 billion for a net loss of $132 million compared to an $885 million loss in H1 2009.
Jha expects the business to make a profit in Q4.
And the new date for a spin-off is Q1 2011 – armed with a $3.5 billion cash injection.
It’s the sort of turnaround no one from the private equity industry would ever have attempted.
And a great example of industrial leadership.
A very good story. Another aspect I’d like to point out is the fact that although Moto had good success with their razr line of phones, they couldn’t capitalize on it. In fact, it seemed as if razr would be the last hurrah. The board did what was expected – fired the incumbents, and got some fresh blood. Good to see that Sanjay decided to turn things around (instead of laying the blame on his predecessors and wrapping things up nicely). Moving to Android wouldn’t have happened with the old management around.
However, it still remains to be seen if Android can sustain the good news on the Moto balance sheets. Surely, they got lucky with the smart phone revolution and the timing of Android. But continuing the success, now that Android has become commodity, will truly the test the staying power of Sanjay et al.