Subject: [NEXTEL-1] Motorola wants cell lead in N. America

From: Marcel <[email-masked]>
Date: Mon, 06 Jan 2003 12:28:42 -0500

Motorola wants cell lead in N. America ; Exec: Company is 'fixated
passionately' on retaking No. 1 spot in phones here
Source: Chicago Sun - Times
Publication date: 2002-12-19
Arrival time: 2003-01-06

Motorola Inc., which lost its long-held supremacy in U.S. mobile
telephones to Finland's Nokia Oyj in 1999, is counting on Tom Lynch to
reclaim its turf.

"We can't rest until we have No. 1 in North America, and it's well defended,"
Lynch said in his first comments since becoming president of Motorola's
cell phone business in August. "I don't mean that it's our birthright, but it is
our home."

Lynch, 48, has work to do: Customers buy three Nokia phones for every two
from Motorola. Lynch, who will unveil the company's 2003 phones next
month, plans to boost sales and profit by offering new handsets with color
screens and working more closely with cellular operators to tailor devices.
He also wants to take the top spot from Nokia in Asia and pass Siemens
AG for No. 2 in Europe.

In particular, Motorola is "fixated passionately on regaining the No. 1
position" in North America, Lynch said.

Sales in the mobile-phone unit, Motorola's biggest at about 40 percent of
revenue, have stalled. Last quarter they dropped 2.3 percent to $2.63 billion
as delays of four to six weeks hampered shipments of two new phone
models.

Motorola has cut costs by selling phones with common chips and software,
emulating a Nokia strength, though it has more work to do in that area,
Lynch said in a speech at a Lehman Brothers telecommunications
conference in Florida, where he outlined his strategy to investors. Lynch
also plans to make phones easier to use and add features such as games
that increase revenue for wireless operators.

Lynch "comes across as someone who's aggressive and wants to make
things happen," said Vic Hawley, a fund manager at Reed Conner & Birdwell
Inc., which held 1.86 million Motorola shares as of Sept. 30. "These goals
are great to have, but it's not going to be easy."

Improvement can't come soon enough for Motorola investors like Hawley.

Motorola shares fell 28 cents to close Wednesday at $9.22, adding to the
39 percent plunge so far this year. The stock is near a 10- year low and is
on pace to decline for the third straight year as sales growth in mobile
phones slows, demand for wireless-network gear drops, and cable
companies order fewer set-top boxes.

In the third quarter, North Americans bought 7.46 million Nokia phones,
compared with 4.19 million from Motorola, according to market researcher
Gartner Inc. Gartner's figures exclude Motorola's phones sold to Nextel
Communications Inc. under an exclusive agreement. Nokia's share of the
market totals 35 percent against Motorola's 20 percent.

Lynch, previously president of a smaller Motorola unit that makes batteries
and automotive electronics, came to the company in the 2000 acquisition of
General Instrument Corp. There Lynch ran satellite and
network-transmission businesses.

After Lynch's colleague for 20 years, Edward Breen, quit as Motorola's
president in July to head Tyco International Ltd., Lynch sought the open
top slot at the cell phone unit, he said in an interview. The company, which
has shed 50,000 jobs, or one-third of the work force over the last two years,
is no longer overstaffed, he said.

"It's a very different company than it was two years ago," Lynch said in the
interview.

Investors credit Lynch's predecessor Mike Zafirovski, who had headed the
cell phone unit and was promoted to president of Motorola after Breen left,
with stemming losses and market-share declines in mobile phones. For the
first nine months of the year, the cell phone division earned $209 million,
compared with a loss of $1.71 billion in the year-earlier period.

In his conference presentation, Lynch repeated Motorola's earlier goal of
boosting its share of the cell phone market to 25 percent within several
years from what Motorola estimates is now 18 percent.

Besides trying to improve its cell phone share in Asia and Europe, Lynch
also must watch Motorola's back: South Korea's Samsung Electronics Co.,
No. 3 in worldwide phone sales, has cut its gap with Motorola in half to
about four percentage points over the last year, according to Gartner.
Samsung has been quicker to mass- produce phones with color screens
and digital cameras.

Bloomberg News

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