Editor’s Note: RCR Wireless News goes all in for “Throwback Thursdays,” tapping into our archives to resuscitate the top headlines from the past. Fire up the time machine, put on those sepia-tinted shades, set the date for #TBT and enjoy the memories!
Motorola chases the iPhone
Motorola Inc. says its troubled handset business is improving and will be stronger by the end of the year, but CEO Gregory Brown isn’t willing to say when he expects the unit to break even. Yet Brown insists the division, which lost $346 million in the second quarter, will continue to improve with help from more profitable new phones and continued cost reductions in the second half of this year. Motorola’s stock bounded 12% higher Thursday on surprise news that the communications giant posted a small profit. Brown told Crain’s Chicago Business on Thursday that the company isn’t planning any more job cuts beyond the 2,600 layoffs announced in April. Schaumburg-based Motorola employs about 15,000 in Illinois. Brown said he expects to roll out about 34 new phones by year’s end, more than double the number introduced in the first six months of the year. That’s likely to include an answer to Apple Inc.’s popular iPhone, a Web-friendly phone with a touch-sensitive screen. The phone is now in its second generation, accompanied by look-alikes from most rivals, except Motorola. Brown said new phones in the second half of the year will have “capabilities that will include touch and messaging . . . and we’ll be looking to enhance our smartphone portfolio.” … Read more
Motorola gets a new co-CEO to turn around its handset division
Sanjay Jha, the newly minted co-CEO of Motorola Inc. and designated turnaround artist for its handset division, told an audience of analysts and media this morning that within 90 days he would review Motorola’s device platforms, product roadmap and make hires in areas where he doesn’t have experience. The latter includes product design, or what Jha called “compelling form factors.” “You’ll see me make some strategic hires in areas where I don’t have experience,” Jha said in the course of a brief presentation to analysts and media this morning with co-CEO Greg Brown. Jha said it would take a year for devices under his supervision to reach the market. The presentation this morning provided a number of insights into Jha’s and Brown’s perspective on the road ahead. One analyst – Maynard Um at UBS – asked about the intended capital structure for a spun-off handset division, given that this would be crucial to Jha’s decision to take his new job. Brown appeared to hold out the possibility that the company would remain in one piece. He said a spin-off is “potentially” set for the third quarter of 2009, dependent on financial and operational successes in the handset division, as well as the findings of the 150 people currently at work on issues related to a spin-off. Jha, 45, said that his discussions with Motorola began in late June, which means that he had six weeks to look under the hood in terms of due diligence, though he cited his four-year working relationship – Jha came to Motorola from chipset giant Qualcomm Inc. – with the company as lending additional visibility into the company’s handset business. Jha said he favored Motorola’s current diversity of device platforms but that he would approach a review – and the question of whether to narrow the number – with an open mind. It is possible that the company will not proceed with every product now on its roadmap, but Jha said it was “not realistic” to make short-term changes in those products. The new handset leader confirmed the importance of the 3G device market and acknowledged Motorola’s weakness in that area. … Read more
FCC gives approval to Verizon’s purchase of Rural Cellular Corp.
The Federal Communications Commissions gave the green light to Verizon Wireless’ $2.67 billion purchase of Rural Cellular Corp., with the transaction and a separate pending deal involving the No. 2 mobile-phone operator bringing to the forefront a number a key policy issues. The FCC, like the Department of Justice previously, conditioned approval of the Verizon Wireless-RCC acquisition on the divestiture of six licenses in Vermont, New York and Washington. It is not yet clear where the divested spectrum will go. While not a blockbuster deal by today’s standards, the transaction became highly controversial and government review was lengthy because of competitive, roaming, consumer and other issues prominently raised by Sen. Bernie Sanders (I-Vt.) and state agencies. The two Democrats on the five-member, GOP-led FCC made specific reference to those issues in separate statements associated with their lukewarm backing of the Verizon Wireless-RCC tie-up. “While I am always troubled by additional concentration in the wireless marketplace, these divestitures will improve competition in the affected areas (as compared to an unconditioned merger) and I am glad we require them,” said Commissioner Michael Copps. “I think it is particularly important that Verizon will divest all of RCC’s spectrum, facilities and customers in Vermont to the nation’s largest GSM carrier – it will ensure that native Vermonters and visitors to the state who happen to have GSM phones will continue to be able use their handsets.” Copps’ comments seem to indicate that AT&T Mobility will be the new home for the GSM network that RCC operated in the Northeast, but there is still some question as to how much spectrum will be included in the spin off. … Read more
Verizon rolls out Rev-A for PTT
Verizon Wireless has re-placed itself in the push-to-talk arena. As promised earlier this year, Verizon Wireless has released two new PTT phones, running on the carrier’s CDMA2000 1x EV-DO Revision A network. The new devices are the Motorola Inc. Adventure V750 and the Casio G’zOne Boulder, both of which sport rugged construction, hinting at the target audience. Verizon Wireless spokeswoman Brenda Raney said the new phones run on the Motorola/Winphoria platform, the same Verizon Wireless has used for previous push-to-talk phones, just now on its faster network. Early reports had suggested that the service would run on Qualcomm Inc.’s BREWchat platform, which took some cues from Qualcomm’s Qchat service, which is exclusive to Sprint Nextel Corp. Raney said the new phones are compatible with the older devices, but because the older phones do not support Rev. A, when linked both devices will experience the slower non-Rev. A speed. Raney said the new devices will work in 1x markets, but they’ll run at the slower speed. “They’re all compatible,” Raney said. “The biggest difference is speed. Speed had been an issue with previous PTT offerings. Initially, the service’s packet-based offerings running on CDMA networks were dinged for falling well short of the sub-one second set-up and intracall latency provided by Sprint Nextel Corp.’s iDEN service. AT&T Mobility and Alltel Communications L.L.C. managed to undercut those differences using a circuit-switched-based offering from Kodiak Networks, but that also failed to match the outright speed of the iDEN service. … Read more
Unlimited service offers pop up in the no-contract space
Just like Ronald Reagan claimed with his trickle-down economic plan, wireless customers are beginning to see unlimited offerings filter down to cheaper price points and in some cases to offerings that do not require a cumbersome contract. Last week Tracfone Wireless Inc. subsidiary Net10 jumped into the increasingly popular unlimited-service-plan play with its new Net10 Unlimited Plan, which offers unlimited calling and texting for $80 per month. Per Tracfone’s modus operandi, the unlimited offer does not require a contract or credit checks, though a customer does have to set up a recurring payment system using a credit card. The offering one-ups rival Virgin Mobile USA Inc. – that carrier’s recently launched Totally Unlimited plan also offers unlimited calling without a credit check or contract for $80 per month – with the unlimited texting option, unlimited usage of Net10 Mobile Web and unlimited calls to directory assistance. Virgin Mobile USA allows customers to add unlimited texting for an additional $10 per month as well as unlimited data services. Both offerings trump plans from the nation’s largest operators in that they do not require a customer to sign up for a contract and in some cases also undercut their larger competitors on price. AT&T Mobility and Verizon Wireless offer unlimited calling plans for $100 per month, while T-Mobile USA Inc. provides unlimited texting with its $100-per month calling plan and Sprint Nextel Corp. throws in a bushel of data offerings with its unlimited plan.
The plans also could pressure flat-rate, unlimited calling plans from regional operators Leap Wireless International Inc. and MetroPCS Communications Inc. … Read more
Eighth-largest handset ODM spun off to VC company
Safran said it will swallow $343 million to spin off its troubled Sagem Mobiles division to venture capital firm Sofinnova. Sofinnova plans to rebrand the handset manufacturer as Sagem Wireless, with Safran holding a 10% stake. The company will develop and market products under other brands for operators or other manufacturers, as well as for fashion and sports firms as well as producers of high-end goods. Safran will take the $343 million hit in handover charges and write-downs. Sagem Wireless will claim 310 employees of the former Safran outfit, 240 of whom will be based in China. Another 250 members of Sagem Wireless’ research and development team will be transferred to Esmertec and Purple Labs – companies in which Sofinnova is an investor – and will be stationed at Sagem Wireless’ Paris headquarters. “I am convinced that this will be a successful solution, because the ODM (original design manufacturer) business model clearly addresses specific needs, while at the same time we will reduce our fixed costs by integrating the R&D teams from Sagem Mobiles and companies in the Sofinnova portfolio,” said Safran CEO Jean-Paul Herteman.
Sagem Mobiles is the eighth-largest phone maker in the world, according to IDC, and rang up just over $1 billion in sales last year. The company will continue to operate as it has until the transaction’s close, which is expected by the end of the year. … Read more
Nortel’s losses widen
Nortel Networks Corp.’s stock plunged nearly 15% after the infrastructure provider released relatively flat second quarter results, but warned of future instability in the U.S. market.
The Toronto-based company posted Q2 revenue of $2.62 billion, a 2% increase year-over-year. Of the total revenue, just over $1 billion was derived from carrier networks, a 2% drop from the year-ago quarter and a 15% drop from the first quarter of this year.
Nortel said carrier revenues benefited from its joint venture with LG Electronics Co. Ltd., but was offset by a decline in CDMA and legacy switching sales. Competitor Alcatel-Lucent reporter similar struggles in the CDMA market earlier this week. Net losses increased from $37 million during the second quarter of 2007 to $113 million this year. … Read more
Check out the RCR Wireless News Archives for more stories from the past.
