Zander: Motorola will rebound with new handsets

The day after announcing that 4,000 employees will be laid off, Motorola CEO Ed Zander told investors that he plans to boost profits with a wide range of multimedia handsets instead of relying on a single blockbuster product like the Razr cell phone.

“We’re not going to have another Razr. Every once in a while, something will pop, but there have been only three in recent years — the Microtec, the Startec, and the Razr,” Zander said Thursday in a webcast address at the Lehman Brothers Worldwide Wireless and Wireline Conference in New York.

Now the company is preparing to launch products in Europe and Asia during June and July: the Razr2 cell phone, Moto Z8 handset with a digital music player and mobile TV, Moto Q 9 mobile e-mail smartphone, and Rokr Z6, a handheld MP3 music player and cell phone.

“So there are four of them, which proves we can still design some pretty wild things. But we need more of them at more price points with more geographies and more carriers,” Zander said.

A wider range of products will allow Motorola to focus on its twin strategies of selling low-end handsets in emerging markets such as the Middle East and southeast Asia through channel distributors and retail partners, and selling high-end handsets in Europe, China, and Japan.

Zander acknowledged that competing vendors, such as Nokia and Sony Ericsson, have already gotten a start in those areas, but said Motorola will catch up fast with the widespread emergence of WiMax wireless networks in the U.S.

“We’re still very PC-centric with MP3 over here, we’re very tethered. But in Europe and Asia and even Latin America, it’s more of an over-the-air experience to download music and video. Hopefully, that will change in the U.S. as we get these networks installed in the second half of 2007 and in 2008.”

However, Motorola faces an uphill climb to regain its lost market share, according to a study released Thursday. Nokia surged forward on mobile phone sales in China and Japan during the first quarter of 2007, padding its dominant lead over competitors, according to Gartner.

The overall industry sold 257.4 million units during the first quarter, a healthy growth rate of 14 percent over the same quarter last year, despite the annual post-holiday sales slump in Western Europe and North America, Gartner said. But Nokia outperformed its rivals, claiming 35.7 percent market share for a large lead over Motorola’s 18.5 percent, Samsung’s 12.5 percent, Sony Ericsson’s 8.4 percent, and LG Electronics’ 6.2 percent.

Motorola suffered from stocking its channel resellers with excess products in the first quarter, forcing them to drop prices to push the phones into end-users’ hands, Gartner analyst Carolina Milanesi said in the report. That problem will persist through the second quarter, but the company could rebound if there is strong demand for the Razr2, she said.

Zander admitted the company had been tripped up when those slowing sales threatened to overwhelm corporate overhead costs.

“The last few months have been very unsettling,” he said. “January and February caught us by surprise, quite frankly. We did have to pull the trigger quickly with some headcount expenses, we had to get that done quickly.”

The latest layoffs came just four months after Zander announced a round of 3,500 job cuts in January. Together, the layoffs will allow Motorola to save nearly $1 billion every year, giving it the flexibility to increase funding for new areas of research in the fast-changing mobile handset segment, he said.

But first, Zander faces the task of reassuring workers who were shaken by the downsizing. “I’m spending the better part of this week traveling around the country talking to employees because they get nervous. We have to get back on track,” he said.