WCA May 2008

business as a way to improve profitability. “I don’t want to preordain how or if it happens,” Donald F McLellan, a senior vice president for corporate strategy, told the New York Times. “This is genuinely an exploration – not more than that.” (‘Motorola Weighs a Shift in Cellphones,’ 1 st February) Mr McLellan said the announcement was prompted by a stock price that was ‘unacceptable at these levels.’ The value of Motorola shares dropped 18.8% on the day in late January when the company announced a decline of 84% in fourth-quarter 2007 profit and warned of challenging months ahead. As reported by Laura M Holson, of the Times, the share price of $11.50 had fallen from a 52-week high of $19.98. Motorola’s phone shipments plunged 38% in the fourth quarter of last year as the company – losing customers to the iPhone from Apple and camera phones from Samsung Electronics – moved closer to relinquishing its spot as the third-largest handset maker in the world. Cellphone production is the largest division of the company, with $18.99 billion in net sales in 2007, a 33% decline from a year earlier. Two other units are smaller but profitable. Ms Holson wrote: “The company has been under pressure from the investor Carl C Icahn, who led a fight for a seat on Motorola’s board because he thought that management had not done enough to increase the price of the stock.” While he was unsuccessful, his criticism helped speed the departure of the company’s chief executive and the installation of a successor. Mr Icahn, who had urged the splitting-off of the cellular unit from the rest of the company, said in a statement that he was pleased to see Motorola finally exploring that possibility. “[I] believe Motorola is finally moving in the right direction,” the financier and corporate raider said. “But it certainly still has a long way to go.” Mr Icahn, whose net worth of $14.5 billion made him the 18 th -richest man in America in 2007, owns some 33.5 million shares of Motorola, representing a 1.39% interest in the company. In a transaction apparently prompted by its favourable ❖ ❖ analysis of the Chinese market for cable TV, Motorola announced that it has acquired the assets related to digital cable set-top products of Zhejiang Dahua Digital Technology Co Ltd and Hangzhou Image Silicon. The acquisition would expand Motorola’s presence in China and improve its time-to-market there. Simon Leung, president of Motorola Asia Pacific, said: “[Some] 130 million Chinese households currently subscribe to cable and, as customers make the transition from traditional analog solutions to digital cable, digital cable subscriptions in China are expected to grow from 10 million in 2006 to over 165 million by 2016.” As reported by Dow Jones Newswires (25 th February), Motorola describes Zhejiang Dahua Digital as a company focused on manufacturing, marketing, research and development, and services for digital TV set-top boxes. Terms of the acquisition were not disclosed.

Consumer Reports is published by Consumers Union (Yonkers, New York), an independent non-profit organisation that defines its mission as working ‘for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves.’

Ghosn of Nissan sees an American car market in recession

The chief executive of Nissan Motor Co is not pessimistic about the global automotive industry – at least not across the board. Carlos Ghosn, who is also president and CEO of Renault SA of France, told reporters in Seoul, South Korea, in February that the Russian market expanded 25% in 2007, with China a close second and India and Brazil coming on strong. He predicted that, over the next two years, Russia will surpass Germany as the largest auto market in Europe. “Nobody can ignore Russia,” said Mr Ghosn, as reported by the Detroit News. Renault accordingly signed an agreement in December to become a 25% shareholder and strategic partner with Russian auto maker Avtovaz. But Mr Ghosn, who was visiting South Korea to meet with local Nissan and Renault officials, was less sanguine about present prospects for American auto makers. He said: “We are very lucid . . . that there is a recession in the United States, at least in the car market.” (‘Nissan’s Ghosn: US Auto Market in Recession,’ 22 nd February) The American market, like the Japanese, has been stagnant for the past four years, Mr Ghosn noted. US car and light truck sales totalled 16.1 million vehicles in 2007, the worst year in a decade, and sales are expected to slip this year as well. Even so, this shrewd observer of the automotive scene expressed optimism that the US market will improve, although his time-frame was somewhat ambiguous. He said only that the American auto market ‘will not stay in recession for a long time.’ Earlier, Mr Ghosn had told students at Seoul’s Korea University that global auto makers must focus on emerging markets: that growth in countries such as Russia, China, India, and Brazil will be key. He said flatly, “No car manufacturer can ignore these markets.” In that broader perspective, Mr Ghosn saw auto makers everywhere facing rising costs for iron ore, precious metals, aluminium, and other materials.

He said, “These represent risk for the industry.”

Telecommunications

Its stock price well down, Motorola considers getting out of the cellphone business

Motorola (Schaumburg, Illinois) has said that it is exploring the possibility of selling or spinning off its cellular phone

Dorothy Fabian – Features Editor

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Wire & Cable ASIA – May/June 2008