Motorola Case Study
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The company I choose is Motorola, Motorola started in 1928 by Paul V. Galvin and his brother Joseph in Chicago under the name Galvin Manufacturing Corporation. Motorolas first product was the Battery Eliminator which allowed battery powered radios to run on household electricity (Motorola History Timeline, 2009). From there the company started to produce car radios for entertainment, police radios and two way radios that were instrumental during World War 2. In 1947 the company changed its name to Motorola Inc., after the change the company would start to make televisions and high powered satellite radios used in space exploration by NASA. In 1984 Motorola came out with the first ever commercial portable cell phone which weighted about 28 ounces (Motorola History Timeline, 2009). Although the company also produced microprocessors and two way radios the cell phone would be their bread and butter product for years to come. Motorola would come to develop the first wireless cable modem for faster internet and come out with the RAZR and CRAZR cell phones that would become popular worldwide. Unfortunately while the RAZR and CRAZR were a booming product companies such as Blackberry and Apple would develop smart phone technology that eventually took over the cell phone industry and left Motorola in the dust. In 2008 the company decided to split into two separate publicly traded entities and in January of 2011 the split was official, Motorola Mobile Holdings Inc. (MMI) with CEO Sanjay Jha and Motorola Solutions (MSI) with CEO Greg Brown. Motorola Solutions work more with businesses and government agencies concentrating on two-way radios, mobile computers, bar code scanners and wireless broadband products (Motorola Solutions/ Company profile from Hoovers). Motorola Mobility will concentrate on providing products for mobile and wire communications, information and entertainment applications. The products will deliver multimedia content such as video, messaging, voice, and internet based services for mobile devices, television and personnel computers. Motorola Mobility will design and produce a variety of cell phones, smart phones, and media tablets. Along with these products the company will offer complementary software, services and accessories. Motorola Mobility will market these services and products to mobile network providers (Verizon, AT&T, etc.), consumers and retailers. Motorola Mobility also provides home segment products such as set-top boxes, end to end digital video and Internet Protocol Television distribution systems, broadband access infrastructure platforms and customer equipment to cable operators and telecommunication service providers (MMI Profile Yahoo Finance , 2011),

Unfortunately after the success of the RAZR and CRAZR cell phones in 2004 – 2007 Motorola started to decline hard and fast. During the last few months or 2007 Motorola posted its income at $100 billion from $623 billion a year prior. Motorola reported an 84% decline in profit during 2008, new CEO Greg Brown warned shareholder that the turnaround for the mobile division will take longer than they expected. After this new was released Motorola shares went down more than 22% to $9.58, this was the lowest the company has traded under $10 since 2003. During the 4th quarter of 2008 the handset division posted an operating loss of $1.2 billion compared to $2.7 billion the year before. Mobile sales for Motorola fell 38% to $4.8 billion and only accounted for a little over 50% of sales in the 4th quarter. Motorola would go on and ship 40.9 million wireless phones in 2008 when just a year prior they sent out 68.7 million wireless phones (Bartash, 2008). The reasons why Motorola has gone from having a commanding presence in the mobile phone industry to being a lower contender is due to the companys lack of persistence in releasing newer up to date mobile phones (Olga Kharif, 2008). Newer up to date phones grab the attention of consumers and mobile phone network providers who are crucial in marketing the these phones to the consumers, Motorola failed to accomplish this to help boost sales. Motorola lost its commanding presence to rival company Apple with their marketing of the new iPhone smart phone that has revolutionized the cell phone industry, CEO Greg Brown stats that “The demand of our products has slowed in an increasingly competitive market”. The iPhone provides multiple featured such as touch screens, e-mail and many other advanced applications that consumers are looking for. By the time Motorola delivered its version of the smart phone the Q in 2007 Apple had already marketed two versions of the incredibly popular iPhone. Other competitors that helped lower Motorolas market share are the Blackberry smart phone which released multiple versions by 2008 and Samsung with its smart phone the Instinct (Olga Kharif, 2008). Due to these increasing issues the company announced that they would split into two separately traded companies in 2008. In 2010 Motorola revealed the details of the split; the company filed a Form 10 Registration Statement with the Securities and Exchange Commission. The split of these two companies were made through a tax-free dividend of shares to current shareholders (Wilson, 2010). As of December 21st 2010 Motorola shareholders will receive one Mobility share for every eight shares of Motorola Inc. The companys split is aimed to help increase the Mobility divisions profits and to give it a new focus on developing newer technology and help increase the sales of its mobile units. Investors who have already held shares in Motorola Inc. have been able to trade the Mobility shares prior to the official split on a “when issued” base. These “when issued” trades were not made official till the official split on Tuesday the 4th but did help decide how Motorolas $21billion market cap would be divided. The Monday before the split was official the Mobility shares jumped $1.14 to close at $30.24 that put the company at $8.9 billion, Mobility shares gained 21 percent since the “when issued” trades in December. Solutions shares went down to $37.48 a 1.5% decline for a market cap of $12.6 billion (Wollman, 2011). Since the official split of the companies on January 4th Motorola Mobility started with a closing price of $33.12 a share, from there on the price has fluctuated from the low 20s to the mid-30s, the lowest being $23.46 on March 15th and the highest at $36.34 on January 19th (MMI Hisorical Prices, 2011). Although the Droid smart phone has been helping Motorola stay afloat Apple is still dominant in the stock market with a market cap of $322 billion and shares at $349.95, Motorolas cap is $7.66 billion and shares at $25.80 as of March 27, 2011 (MMI Competitors, 2011).

The Hubris Born of Success seems to fit in with the downfall of Motorola. Because Motorola has been around since the

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Motorolas First Product And Commercial Portable Cell Phone. (June 29, 2021). Retrieved from https://www.freeessays.education/motorolas-first-product-and-commercial-portable-cell-phone-essay/