The venerable mobile phone innovator has been suffering on two fronts.
1. The company most recently reported its first quarter 2010 results as a profit due to a stronger economy lifting the enterprise and networks divisions. For the phone division, the Droid is the only hot spot, which generated a lot of sales and buzz for Verizon Wireless, where it received an enormous marketing push. In the quarter, the company shipped 2.3 million smart phones, which is up 15% over the 4th quarter. That’s a big boost considering that the 4Q is usually the strongest and the 1st Q is usually the weakest.
The phone division also shipped 43% fewer devices in the quarter, a total of 8.5 million with a 9% decline in revenues. This generated an operating loss of $22 per phone on the lower total volumes, where there is obviously room for improvement. Sanjay Jha is optimistic that the shift in product mix will lead to more smartphones in the second quarter and ultimately to more profits for the phone division by the end of the year. Don’t forget that MOT is planning to break itself into two units – mobile phones and cable boxes in one unit and networks and enterprise in the other, next year.
2. Motorola’s recent annual shareholder meeting had a non-binding vote on executive pay. Usually management wins approval on these kinds of measures, but in MOT’s case, the shareholders’ fury was clearly expressed as only 46% of votes cast supported the company’s compensation policies and practices. This was, as reported in the Wall Street Journal, (sub. required) the first time a major US company failed to earn a majority of support on pay practices.
Of course, if you reviewed the company’s results and then paid accordingly, CEO Jha would be paying to be CEO. Pay has been a particularly painful topic for Motorola shareholders who hired the CEO from Qualcomm with a $104 million package, in 2008, the highest pay of any CEO that year and a year in which the company lost $4.2 billion. Since then, he’s been earning a respectable $4 million/year, while co-CEO Greg Brown earned $8.5 million with only a $51 million loss for 2009.
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