Motorola expects good year for handsets

But more competition

ComputerWire logo Motorola Inc, the world's second largest mobile handset manufacturer, is predicting a turnaround in the fortunes of handset makers in 2003, after two years of misery.

In an interview with Reuters, president and COO of the Schaumburg, Illinois-based electronics giant, Mike Zafirovski, said he expects all of Motorola's business divisions to make a profit this year after two years of cost-cutting that has seen the company's workforce trimmed from a peak of 150,000 in August 2000, down to an estimated 100,000 in 2002.

Motorola's third-quarter figures released in October confirmed it had returned to profitability after six consecutive quarters of net losses, and Zafirovski now believes that industry sales of handsets will increase by 8% to 10% during 2003, after poor growth during 2002.

However, any upturn in mobile handset arena is likely to a double-edged sword, with Motorola's number-two slot in the handset market coming under attack from the Far East, mainly from the up and coming Samsung Electronics Co, which leapfrogged into the number-three slot in 2002. Samsung's strong showing during the year was due to strong demand for its color screen handsets, which accounted for an estimated 10% of all the 390 million handsets sold during 2002.

Motorola is due to report its fourth-quarter results later this month, when it should become clear whether it has managed to fend of Samsung's attentions and retain its hold on its 15% market share.

Zafirovski also took the opportunity to play down ongoing speculation regarding a technology partnership with Siemens AG. He confirmed that Motorola is no longer talking with Siemens, but did not rule out a tie-up if the market heads south. Three months ago, Siemens was rumored to be talking to Motorola about the possibility of swapping its mobile phone interests with Motorola's mobile infrastructure business. This would have boosted Motorola's market share to around 22%, compared with undisputed leader Nokia Corp's 36%.

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