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Wire & Cable ASIA – May/June 2008 32
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,’ 22nd 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
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,’ 1st 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
18th-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 (25th 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.
Dorothy Fabian – Features Editor