Motorola creates history with first loss in 15 years

Late last week, Motorola saw its share price crash on reports on Bloomberg News that the company is facing a severe liquidity crisis. According to Mr. Christopher Galvin, Motorola''s chief executive, the cash position is very positive and it has moved fast to shore this up through reduction in inventories and accounts receivables to the tune of $1.8 billion. The company anticipates the cash position to be positive for the full year.

According to the company’s chief operating officer, Mr. Robert Growney, the company has already initiated substantial cost reduction measures, which include the shedding of up to 12,000 jobs worldwide from its personal communications division that deals in mobile phones. A majority of these jobcuts are in the handsets and network divisions of the company.

Motorola has also strengthened its senior management by bringing in new leadership with proven track records from outside and by promoting next-generation leaders from inside Motorola. Today, the company claims, its businesses are built around a team of operations-focused executives who are committed to driving down costs and improving profit and cash flow.

While analysts agree that the operating conditions have been deteriorating in the last six months, as evidenced by the poor performance of its competitors also, there is a school of thought that the blame for Motorola’s problems lies with the management. According to analysts in this school of thought the company has been losing market share in both, mobile handsets and mobile telephony infrastructure, rapidly in the past few quarters. They believe that the company has misread the cellular market.

These analysts say that, while initially Motorola moved too slowly to digital technology, when it did it put too much emphasis on the high-end Internet-ready phones, which gave the competition ample opportunity to seize the lower and mid segments of the market.