Motorola counts on Razr2 to give company a boost

The company has suffered a year of losses and lackluster launches.

CHICAGO (AP) — With a sleek design and an even sleeker advertising campaign, Motorola Inc. is banking on its new Razr2 cell phone to pump up anemic sales and provide a rosier future after a yearlong slump punctuated by back-to-back losses.

After a first half that may have put CEO Ed Zander’s future employment into question, the end of Motorola’s rough patch may be in sight.

“We indeed believe the worst is over,” Citigroup analyst Jim Suva wrote in a research note last week.

But analysts say the cell phone maker needs a steady string of follow-ups to stay alive in an industry now dominated by products crammed with cutting-edge features and software.

Consumers seem to agree: One group on the social networking site Facebook snarkily calls itself “My Motorola makes a better coaster than a phone.”

Rival Samsung Electronics Co. overtook Motorola this summer to secure the No. 2 spot among cell phone manufacturers worldwide. Finland’s Nokia Corp. remains the far-and-away leader. Some analysts say Motorola’s market share has continued to erode and dropped back to 11 percent in the third quarter, from 22 percent last year.

Motorola hasn’t had much luck on Wall Street either, where its stock has plunged 20 percent since last fall.

“If they have another miss this quarter, the pressure is going to be huge on the board to do something,” said Eric Jackson, a Naples, Fla., shareholder who launched the grass-roots initiative called “Plan B” that calls for Zander’s resignation, among other changes. “You only get to say ‘mea culpa’ so many times.”

Earnings for the July-through-September period amounted to $60 million, or 3 cents per share, compared with a year-earlier profit of $968 million, or 39 cents per share. Excluding charges for layoffs and asset writedowns, earnings from continuing operations were 6 cents per share, or 2 cents better than the consensus estimate of analysts surveyed by Thomson Financial.

Sales fell to $8.81 billion, down 17 percent from $10.6 billion a year earlier but up a percentage point from the second quarter.

The small third-quarter profit was driven by Motorola’s hand-held business devices and high-tech home entertainment gadgets: The company has said its cell phone unit will remain unprofitable until at least 2008.

This is the same company whose original Razr was the cell phone of choice just two years ago, nearly doubling the company’s market share in 18 months. But the company’s decision to dramatically slash prices in order to maintain market share sent the company’s profits into a free fall in the absence of another slam-dunk phone in its portfolio.