Motorola Inc.’s Paging Products Group was a victim of its own success during the last five months of 1995. A variety of factors caused significant delays in the shipments of its popular one-way and two-way pagers, according to several major paging companies.
The backlog, which has begun to resolve itself in recent weeks, was a factor cited by securities analysts in Motorola’s disappointing year-end earnings report, released Jan. 9.
“Normally, Motorola’s delivery time is four-to-six weeks. Right now, delivery time is 90 days. Sometimes, it was well over 120 days,” said Steven D. Jacoby, chief operating officer of Metrocall Inc. in Alexandria, Va. “In the past two to three weeks, there has been a noticeable improvement, and we expect them to have it resolved by the end of the first quarter.”
Jacoby attributes a large part of the problem to Motorola’s failure to anticipate increasing demand for its newer generations of paging products, including Ultra Express, Encore and Advisor.
The backlogs also occurred for paging companies buying Motorola’s FLEX technology for two-way paging, according to Jenny Haynes, vice president of investor and public relations at Paging Network Inc. in Plano, Texas, and Jennifer O’Mahony, director of public relations for SkyTel Corp. in Jackson, Miss.
“We’re not unlike the rest of the industry. We’ve experienced the pinch,” said Mary Ann Haskins, vice president of corporate relations at Preferred Networks Inc. in Norcross, Ga. “Of course, we’re not pleased by the delays, but they have had some legitimate problems.”
Among those were natural disasters-hurricanes struck Florida and Puerto Rico where Motorola has manufacturing plants.
Haskins also credits Motorola with waging a highly successful advertising campaign that has made its products a household name among retail consumers.
In its 10-Q report for the third quarter ending Sept. 30, Motorola said: “Paging Products Group orders increased substantially in the third quarter of 1995, compared to the year-earlier period, driven by growth in the United States … The backlog for paging products at the end of the third quarter is much higher than average in the recent past as the result of semiconductor shortages and selective factory capacity constraints brought about by unexpected strong demand for new products.”
The shipment delays caused several paging companies to tighten up their own inventory management procedures in order to meet consumer demand.
“We operate across the U.S. and normally wouldn’t have to ship (pagers) from one site to another. That’s something we’ve done far more than ever before,” said Haynes of Paging Network Inc. “The situation seems to be resolving itself, but we anticipate some more inventory management in the first quarter.”
Haskins of Preferred Networks said Motorola has been “up front about lead times required. And we’re improving our inventory management, which is key to surviving their delays, using other vendors like Panasonic and NEC [Corp.] or different in-stock Motorola products.”