Motorola, Incorporated (MOT)

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Thomas J. Lynch , CEO/Director
Industry: Telecomm
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Thomas J. Lynch, CEO/Director

1303 East Algonquin Road

Schaumburg, IL 60196

US Map it

Phone: (847) 576-5000

Fax: (847) 576-5372

www.motorola.com

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Motorola

WHERE THEY CAME FROM
One day in 1930, brothers Paul and Joseph Galvin invented a playful name for the new car radio their two-year-old company had just introduced. They combined “motor” with “ola,” a suffix they associated with sound (think Victrola). By the 1940s, Galvin Manufacturing, headquartered in Chicago, was making walkie-talkies used at the battlefront; that company became Motorola in 1947. In 1969, a Motorola radio transponder relayed Neil Armstrong’s famous words as he stepped onto the surface of the moon. And in 1983, Motorola introduced the first commercial cellular phone, a plastic brick weighing 1.75 pounds.

WHAT THEY DO
Motorola is the No. 2 maker of cell phones in the world in terms of market share, falling just behind Nokia and holding a slim lead over Samsung. The company also manufactures such devices as cable modems and the set-top boxes used to decode digital-TV signals, and it provides networking services to consumers, businesses, and governments.

WHAT THEY GOT RIGHT
A study in American entrepreneurship, Motorola, now based in Schaumburg, Illinois, was the No. 1 maker of cell phones in the technology’s early days. In 1996, Motorola’s trim StarTac debuted as the first clamshell phone and, at 3.1 ounces, it acquired high status among early adopters. Years after the StarTac’s discontinuation, devotees were still combing eBay for replacements.

But as sales of cell phones skyrocketed, competition threatened Motorola. Nokia stole Motorola’s spot at the top in 1999. In 2003, C.E.O. Christopher Galvin stepped down to make way for outsider and former Sun Microsystems C.O.O. Ed Zander, but the decline continued. The company experienced a humiliating Christmas season in 2003 when it failed to produce enough phones to meet holiday demand, and Samsung replaced Motorola as No. 2 in 2004.

A new phone introduced in the summer of 2004 brought Motorola back from third place. The company gave veteran engineer Roger Jellicoe, who had worked on the StarTac, and an all-black-wearing industrial designer named Chris Arnholt an unlimited budget to produce the thinnest phone ever. Their mission was kept top secret, lest competitors produce a rival even before the new phone was released.

Their collaboration resulted in the successful Razr V3, an ultra-thin phone with a price tag of $500—somewhat costly but not enough to dissuade gadget lovers from shelling out for it. In the second quarter of 2005, Motorola’s earnings hit $933 million, a vast improvement over the $203 million loss it recorded in the same quarter of the previous year.

WHAT THEY GOT WRONG
Zander didn’t know when to stop pushing the Razr. He offered the phone at enormous discounts as a way for Motorola to sell its way back to No. 1, but as the Razr became ubiquitous—offered almost free with some service plans—customers upgraded to flashier phones by Samsung and Nokia, and Motorola follow-ups such as the Krzr have struggled to sell, perhaps because of their similarities to the Razr.

Early 2007 wasn’t kind to Zander. Motorola’s stock had plunged in late 2006, and Zander announced plans to cut 3,500 jobs. Then came the news that billionaire investor Carl Icahn, who owned 1.4 percent of the company, wanted to increase his stake to 6 percent and join the board. The final blow: Ron Garriques, head of Motorola’s mobile-phone division, left for Dell in February.

WHAT'S NEXT
Vowing to earn Wall Street’s respect, Zander launched a new plan in Europe, where director of marketing Simon Thompson is on a mission to nurture an emotional attachment in customers who see Motorola’s products as just "cheap, pretty phones." Thompson wants to cultivate "brand love," ­not more Razr attempts. The focus will now be on more nuts-and-bolts aspects of cell phones, such as functionality and customer experience—not just more “cool” design.

Portfolio Articles
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    Jun 25 2008
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    Apr 07 2008
  • Motorola Splits
    Company to spin off flagging cell-phone business.
    Mar 26 2008
  • No Distressed Test Yet
    Investor and budding blogger Carl Icahn on the distressed markets.
    Mar 06 2008
  • Replacement Value
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    Feb 26 2008

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Employees

Number of Employees: 66,000
Revenue per Employee: $554,879

Top Executives

Eugene A. Delaney, Senior VP, Divisional
Daniel M. Moloney, Divisional President/Executive VP
Ray Roman, Senior VP, Divisional

Kenneth C. Keller, Jr., Executive VP/Other Executive Officer
A. Peter Lawson, Executive VP/Secretary/General Counsel
Terry Vega, Senior VP, Divisional

Steven J. Strobel, Treasurer/Senior VP, Divisional
Laurel G. Meissner, Chief Accounting Officer/Vice President, Divisional
Richard N. Nottenburg, Executive VP/Other Executive Officer

Patricia B. Morrison, Chief Information Officer/Executive VP
Gregory A. Lee, Senior VP, Divisional
Ruth A. Fattori, Divisional Executive VP

Adrian Nemcek, Divisional President/Executive VP
Marc E. Rothman, Senior VP, Divisional/CFO, Divisioinal
Paul J. Liska, CFO/Executive VP

Padmasree Warrior, Executive VP/Chief Technology Officer
Rita S. Lane, Senior VP, Divisional

Board of Directors

Judy C. Lewent, Director
Gregory Q. Brown, President/Director/CEO

William R. Hambrecht, Director Nominee
Miles D. White, Director

Edward J. Zander, Chairman of the Board/Director
Thomas J. Meredith, Director
Ron Sommer, Director

Keith Meister, Director
Dr.John A. White, Director

Financials

Quarterly
Annual

Income Statement 04/2008 01/2008 10/2007 07/2007
Sales 5.1 Bil. 6.97 Bil. 6.16 Bil. 6.15 Bil.
Gross Operating Profit 2.35 Bil. 2.67 Bil. 2.65 Bil. 2.58 Bil.
Operating Income before D & A (EBITDA) 112 Mil. 303 Mil. 340 Mil. 174 Mil.
Total Income Before Interest Expenses (EBIT) -165 Mil. 33 Mil. 99 Mil. -23 Mil.
Total Net Income -194 Mil. 100 Mil. 60 Mil. -28 Mil.
Basic EPS, Total -0.09 0.04 0.03 -0.01
Diluted EPS, Total -0.09 0.04 0.03 -0.01

BALANCE STATEMENT 04/2008 01/2008 10/2007 07/2007
Cash and Equivalents 2.69 Bil. 2.75 Bil. 2.32 Bil. 2.77 Bil.
Total Assets 20.48 Bil. 22.22 Bil. 21.66 Bil. 21.81 Bil.
Total Liabilities 11.78 Bil. 12.5 Bil. 12.9 Bil. 12.88 Bil.
Total Capitalization 19.25 Bil. 19.44 Bil. 17.67 Bil. 17.55 Bil.

Cash Flow 04/2008 01/2008 10/2007 07/2007
Net Cash From Continuing Operations -343 Mil. 729 Mil. 382 Mil. 20 Mil.
Net Cash From Investing Activities 553 Mil. 2.38 Bil. 2.03 Bil. 2.53 Bil.
Net Cash From Financing Activities -415 Mil. -3.3 Bil. -2.85 Bil. -2.51 Bil.
Net Change in Cash & Cash Equivalents -59 Mil. -64 Mil. -501 Mil. -46 Mil.

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Income Statement 2008 2007 2006 2005
Sales 26.23 Bil. 29.59 Bil. 24.45 Bil. 20.17 Bil.
Gross Operating Profit 10.39 Bil. 13.28 Bil. 12.39 Bil. 11.16 Bil.
Operating Income before D & A (EBITDA) 869 Mil. 4.68 Bil. 4.85 Bil. 3.89 Bil.
Total Income Before Interest Expenses (EBIT) -390 Mil. 4.94 Bil. 6.84 Bil. 3.45 Bil.
Total Net Income -49 Mil. 3.66 Bil. 4.58 Bil. 1.53 Bil.
Basic EPS, Total -0.02 1.5 1.85 0.65
Diluted EPS, Total -0.02 1.46 1.81 0.64

BALANCE STATEMENT 2008 2007 2006 2005
Cash and Equivalents 2.75 Bil. 3.21 Bil. 3.77 Bil. 10.56 Bil.
Total Assets 22.22 Bil. 30.98 Bil. 27.87 Bil. 21.08 Bil.
Total Liabilities 12.5 Bil. 15.42 Bil. 12.49 Bil. 10.57 Bil.
Total Capitalization 19.44 Bil. 19.85 Bil. 20.48 Bil. 17.91 Bil.

Cash Flow 2008 2007 2006 2005
Net Cash From Continuing Operations 729 Mil. 3.9 Bil. 4.6 Bil. 3.15 Bil.
Net Cash From Investing Activities 2.38 Bil. -1.05 Bil. -2.38 Bil. -163 Mil.
Net Cash From Financing Activities -3.3 Bil. -3.16 Bil. -1.19 Bil. -237 Mil.
Net Change in Cash & Cash Equivalents -64 Mil. -562 Mil. 928 Mil. 2.77 Bil.

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