Chicago Daily Herald: Motorola investors, CEO see progress

By Anna Marie Kukec Daily Herald Staff

Published: 10/26/2007 12:14 AM

While the mobile phone business dragged down Motorola and it considers some changes between its Chicago and Libertyville operations, Chief Executive Ed Zander says he won't give up.

That upbeat attitude apparently paid off Thursday when, despite Motorola reporting a 94 percent drop in profit over the last quarter, its shares rose 75 cents, or 4 percent, to $19.30 in New York Stock Exchange composite trading, the largest gain since January.

"They're in between product cycles now and they're in a rebuilding mode, sort of like the Chicago Bears," said Mark McKechnie, an analyst with American Technology Research. "The real question down the road is how much earning power can they unlock? They have a long road to go."

Motorola's overall third-quarter profit slowed to $60 million, or 3 cents a share, compared to $968 million, or 39 cents a share, in the same quarter last year. Sales were $8.8 billion, compared to $10.6 billion the year before.

Still, while the mobile device business sales plunged 36 percent, the other businesses showed progress. Home & Networks Mobility was up 6 percent and Enterprise Mobility Solutions showed a 47 percent boost.

The company outlook for the fourth quarter said earnings per share from continuing operations would be 12 cents to 14 cents.

"We've made some progress toward stability," Zander said in an interview. "We did what we said we were going to do and actually the numbers in some areas."

So while the mobile devices unit hasn't had a hit cell phone in roughly three years after the Razr debuted, Zander said he aims to grow the company as in years past.

"After all, 49 percent of our company did very well," Zander said. "It's all about execution. We know that and we'll do that."

Zander said his top lieutenants are carrying out a turn-around strategy put in place earlier this year. This included cost-cutting and streamlining globally and the elimination of 7,500 jobs.

"Our work force plans are now complete," Motorola Chief Operating Officer Greg Brown said in an interview. "We're now focused on profitability. We know there's more work to be done."
Zander said he is eyeing more options with his downtown Chicago development center, which just expanded to a second floor.

"We'll continue to enrich Chicago and look at Libertyville and see what makes the best sense down the road," Zander said.

Libertyville is Motorola's base for its mobile devices business, which includes the development of cell phones.

Zander acknowledged this has been "an exceptionally tough year."

"We've seen some growth in other areas and we'll see more gains as we go along. We will continue to execute," Zander said. He praised his employees for undergoing a tremendous amount of pressure to produce winning products while maintaining large spending cuts.

Despite the heat this year, including power struggles with billionaire activist Carl Icahn and financial blogger Eric Jackson in bids to remove Zander, the chief executive plans to move the company ahead.

"It is looking like Zander congealed his support from the board and shareholders at least for the near term," said David Weissman, senior telecom analyst with Zacks Investment Research. "The recent shareholder letters and defeat of Carl Icahn's director initiative leads us to believe
Zander may have more time at the helm."

Zander said he likes where the company is heading.

"I like where we're at and how our engineering is being deployed," Zander said. "We're going to focus our marketing on where the opportunities are, including here in the U.S. There are plenty of opportunities here, too."

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