Fundamental and Technical Analysis Motorola GEMS 2006 - Essay Example

Fundamental And Technical Analysis Motorola GEMS 2006 CONTENTS INDUSTRY ANALYSIS 3 INDUSTRY BACKGROUND 3 COMPETITIVE PRESSURES 4 There were 16 commercial 3G networks worldwide at the beginning of 2004, with 60 more expected by the end of the year. In Japan and Korea, sales of 3G handsets were booming. In the US, 3G services had been launched in several cities. The country's largest operators had themselves committed to building 3G networks. 4 PORTER'S FIVE FORCES 5 Bargaining Power of Suppliers 6 Bargaining Power of Customers 7 INDUSTRY LIFE CYCLE 8 ORGANIZATION ANALYSIS - MOTOROLA 10 MISSION STATEMENT 10 VALUES, GOALS AND OBJECTIVES 10 ORGANIZATIONAL STRUCTURE 10 ORGANIZATION HISTORY 10 SWOT ANALYSIS  10 BUSINESS DESCRIPTION 11 PRODUCT AND SERVICES 11 PRODUCTS & SERVICES – OVERVIEW 12 SALES SUMMARY BY GEOGRAPHICAL DISTRIBUTION 13 REVENUE AND INCOME SUMMARY BY PRODUCT 13 FINANCIAL INFORMATION FOR THE FISCAL YEAR 13 FINANCIAL SUMMARY FOR THE FISCAL YEAR 13 BREAKUP OF REVENUE AND SALES TRENDS 13 RATIO AND MARKET INDICATORS 13 EARNING AND INCOME ESTIMATES 13 STOCK ANALYSIS 14 RECENT NEWS 15 Motorola Announces Departure of Stu Reed 15 SCHAUMBURG, Ill. -- March 7, 2008 -- Motorola, Inc. (NYSE: MOT) today announced that Stu Reed, formerly the president of Motorola’s Mobile Devices business, has decided to leave the Company, effective immediately. 15 Mr. Reed and his team launched a number of key initiatives important to the Mobile Devices business that the Company will continue to drive and expand upon. Prior to Mr. Reed’s role as Mobile Devices president, he led the transformation of our supply chain organization, which encompasses the global operations associated with procurement, new product introduction, manufacturing and customer fulfillment. In addition, Mr. Reed also helped the Company generate significant cost savings by consolidating suppliers and implementing a comprehensive supply chain strategy. 15 “Motorola appreciate Stu’s many contributions to Motorola and wish him the best in the future,” said Greg Brown, president and chief executive officer. 15 Isle Of Man Pockets Motorola’s Covert TETRA Terminals 15 Motorola to supply Isle of Man Department of Home Affairs with covert TETRA radios DOUGLAS, Isle of Man – 5th March 2008 – Motorola, Inc. (NYSE:MOT) has been chosen by the Isle of Man Government Department of Home Affairs to supply a fleet of covert TETRA terminals. Motorola will supply the covert devices in mid 2008, which will be used by the Isle of Man Constabulary and Customs & Excise. 15 Motorola worked closely with a number of public safety users including the Isle of Man Department of Home Affairs, Isle of Man Constabulary and Isle of Man Customs & Excise during the design process to ensure it delivered a covert TETRA radio that met the special needs of the users. The new TCR1000 TETRA Covert Radio will help improve operational effectiveness as the small ergonomic design means officers do not feel as though they are wearing a radio, helping them to disguise their equipment during covert operations. “At last Motorola have a covert radio that is fit for purpose,” says Robert Williamson, technical director, Isle of Man Department of Home Affairs. “TETRA is a very appropriate communications technology for policing activity, but until now Motorola have not had a suitable form factor for covert operations. Motorola’s innovative TETRA radio design will be of real benefit in everyday covert activities. Our users are delighted with the new covert set.” The small, lightweight design of the TCR1000 Covert TETRA terminal incorporates many innovative features to address the unique requirements of covert users such as discrete audio, radio control and battery lifetime. Despite the compact design, the Motorola covert TETRA radio performs to the same high standards as more mainstream Motorola TETRA terminals and offers excellent functionality including options for integrated GPS and end to end encryption. Manuel Torres, vice president and general manager, Motorola Government & Public Safety, EMEA added: “Our close collaboration with the Isle of Man authorities has been a vital element in producing such a compact, powerful and well-suited covert radio. Those that’ll actually be using the radios have been very enthusiastic about the radio during the extensive and robust evaluation process, and Motorola’re rightly proud of having developed such a well-received product.” 16 REFERENCE 18 INDUSTRY ANALYSIS INDUSTRY BACKGROUND In mid-2004, the 3G (Third Generation) mobile phone industry seemed to be coming back to life. 3G had made newspaper headlines in the early 2000s following the announcement of major license auctions in Europe. Since then the market had failed to grow as expected. Many operators had paid huge amounts to buy licenses but found it increasingly difficult to make their operations viable. As 2004 drew to a close, operators wondered how the industry would evolve and what applications would be in demand. Mobile telephony had first taken off in Europe. 3G initiatives were first launched in Europe after the widespread success of 2G. In case of 2G, regulators and operators had agreed on a single standard, called GSM (Global Standard for Mobile), which replaced dozens of competing standards and allowed easy roaming from one country to another. When GSM emerged as the dominant global standard, European firms, especially Nokia and Ericsson prospered. Then, as the internet boomed in the late 1990s, it was assumed that a mobile-internet boom would follow. European governments felt that compelling Europe's operators to switch to 3G, instead of offering them more 2G capacity, would ensure that the continent maintained its lead over the rest of the world. So as 2G networks filled up, regulators offered the operators no alternative but to bid for new 3G capacity. In many cases, operators were effectively bidding for the right to stay in business. For operators, it made sense to look seriously at 3G. Even though mobile phone usage had increased. the average revenue per user (ARPU), had levelled off. The most valuable subscribers had been the first to buy mobile phones. Late adopters made fewer calls and spent much less. With subscriber numbers reaching saturation, especially in the rich world, the industry looked for new sources of growth. Services such as video and internet access seemed to hold the maximum promise. Hence the appeal of 3G. POTENTIAL GROWTH Mobile operators around the world, especially in Europe, paid a total of €109 billion (then $125 billion) for license to build and operate 3G networks, which offered better performance and more capacity than existing second-generation (2G) networks. Several European countries held auctions for their 3G licenses in which operators bid huge sums. In Britain and Germany, for example, operators ended up paying around €8 billion for each 3G license. This growth in licensing indicates the increasing number of players in the industry and the huge growth, the industry is posting. COMPETITIVE PRESSURES There were 16 commercial 3G networks worldwide at the beginning of 2004, with 60 more expected by the end of the year. In Japan and Korea, sales of 3G handsets were booming. In the US, 3G services had been launched in several cities. The country's largest operators had themselves committed to building 3G networks. PORTER'S FIVE FORCES Michael Porters Five Force Analysis Threat of New entrants: The Entry barriers include Capital The capital outlay needed for starting up the operation in this industry is huge ($60 – $70 million), since the leasing expenses and the taxes are high. The capital includes land and building, infrastructure etc. Labor: In this industry the retention rate is high when compared to the others because of the demand for the experienced professionals in the industry. Retaining skilled labor is a major issue for a new entrant. Tax Structure: Mobile companies have to bear huge taxes levied on them by the government for property, water, electricity etc.in addition to the corporate tax levied on them. Beside the high entry barriers, new entrants in this industry are high in recent days. Threat of substitutes: The growing popularity of emails and blogs can be a huge challenge to mobile manufacturers replacing the mobile with internet. Rivalry: There is a fierce price war going between existing players. NOKIA, SONY ERICSSON, HUAWEI, BENQ etc. are the major competitors for motorola. The competition is currently focused on addon features in the mobile and customization of mobiles to particular market segments. Bargaining Power of Suppliers The bargaining power of suppliers can be crucial. The suppliers are Chip manufacturers, software companies and the like. The suppliers have undergone a drastic change over the years and with it their bargaining power also has increased. The suppliers include giants like INTEL, MICROSOFT etc. These big players have huge bargaining power and they fix the price. Bargaining Power of Customers The bargaining power of customers has grown drastically in this internet era. The customer is well informed in all aspects including price, service etc. and their decision making is very rational. A lot of online services provide a comparison of mobiles and customers can bargain more considering these aspects. The customers include Corporate, Individual households etc. As suggested by Michael Porter, stronger the forces, difficult it is to enter and survive in the industry. For Mobile industry, all forces are very strong indicating the level of competition and fierceness of the industry. So, only serious players can enter into the field. INDUSTRY LIFE CYCLE The stages of an Industry life cycle includes the following: Embryonic Growth Shakeout Maturity Saturation The Mobile industry is currently in the early maturity stage and slowly moving towards maturity. Substantiation for the above statement Maturity stage Characteristics Strategic Alliances Joint Ventures Acquisitions Business units sell out Few players in the industry due to consolidation Cartel formation Highly capital intensive in investment and a lot of barriers to new entry Business Diversification Based on the above characteristics and their matching with mobile industry, the conclusion that mobile industry to be in the maturity stage is arrived. Motorola has become a pioneer in this industry and it is striving to survive and maintain its position by diversifying its business into many strategic business units. ORGANIZATION ANALYSIS - MOTOROLA MISSION STATEMENT VALUES, GOALS AND OBJECTIVES ORGANIZATIONAL STRUCTURE ORGANIZATION HISTORY Since 1928, Motorola has been committed to innovation in communications and electronics. Our company has achieved many milestones in its 75-year history. Motorola pioneered mobile communications in the 1930s with car radios and public safety networks. Motorola made the equipment that carried the first words from the moon in 1969. Motorola led the communications revolution with the first commercial handheld cellular phone in 1983 and the first all-digital high-definition television (HDTV) technical standard in 1990. Today, as a global industry leader, excellence in innovation continues to shape the future of the Motorola brand. SWOT ANALYSIS  Strength Market share – Global Presence Brand name Technology Stylish Value addition Premium product Weakness Customization Opportunities High growth of internet market Threats Competitors Internet – e-mail and other services BUSINESS DESCRIPTION Motorola is known around the world as an innovator and leader in wireless and broadband communications. Motorola are committed to helping you get and stay connected simply and seamlessly to the people, information and entertainment you want and need. Motorola do this by designing and delivering "must have" products, "must do" experiences and powerful networks — with a full complement of support services as well. A Fortune 100 company with global presence and impact, Motorola had sales of US$42.9 billion in 2006. Learn more about our three primary business units in the links below: PRODUCT AND SERVICES Enterprise Mobility Solutions Symbol Enterprise Wireless Broadband Solutions Two-Way Radios TETRA Systems Biometrics Canopy Networks Symbol Enterprise Broadband Over Powerline WiMAX Mesh Broadband Networks Home & Networks Mobility Connected Home Canopy Networks WiMAX Mesh Broadband Networks Mobile Devices Two-Way Radios Bluetooth Products Mobile Phone Accessories Mobile Phones PRODUCTS & SERVICES – OVERVIEW Enterprise Mobility Solutions:  This group includes the mission-critical communications offered by our government and public safety sectors and our enterprise mobility business. Motorola design, manufacture, sell, install and service analog and digital two-way radio as well as voice and data communications products and systems. Motorola deliver mobile computing, advanced data capture, wireless infrastructure and RFID solutions not only to clients in the public sector, but also to retail, manufacturing, wholesale distribution, healthcare, travel and transportation customers worldwide. Through innovative technology, Motorola help people integrate, optimize and manage their networks to seamlessly stay connected as they move about their daily lives. Home & Networks Mobility:   Operators today are being asked by their subscribers to deliver bandwidth-intensive, experience-based services — regardless of the network architecture. Motorola is uniquely positioned to capitalize on this trend, providing integrated, end-to-end systems that seamlessly and reliably enable uninterrupted access to digital entertainment, information and communications services over a variety of wired and wireless solutions. Motorola designs, manufactures, sells and services digital video system solutions and interactive set-top devices; voice and data modems for digital subscriber line and cable networks; and, broadband access systems (including cellular infrastructure systems) for cable and satellite television operators, wireline carriers and wireless service providers. With these solutions, Motorola empowers consumers by connecting their homes — easily keeping contacts, content and services within reach. Mobile Devices:   As a pioneer in wireless communications, Motorola has transformed the cell phone into an icon of personal technology — an integral part of daily communications, data management and mobile entertainment. Motorola not only designs, manufactures, sells and services wireless handsets, but also licenses its vast portfolio of intellectual property. Our collection spans all cellular and wireless systems and includes integrated software applications as well as a large complement of Bluetooth®-enabled accessories. Motorola offer customers innovative product designs that deliver "must have" experiences, such as mobile music and video — enabling seamless connectivity at work or at play. SALES SUMMARY BY GEOGRAPHICAL DISTRIBUTION REVENUE AND INCOME SUMMARY BY PRODUCT FINANCIAL INFORMATION FOR THE FISCAL YEAR FINANCIAL SUMMARY FOR THE FISCAL YEAR BREAKUP OF REVENUE AND SALES TRENDS RATIO AND MARKET INDICATORS EARNING AND INCOME ESTIMATES STOCK ANALYSIS Top of Form MOT (Common) Exchange NYSE (US Dollar) Price $9.82 Change (%)   0.12 (1.21%) Volume 26,821,143 Today's Open $9.88 Previous Close $9.94 Intraday High $10.02 Intraday Low $9.63 52 Week High $19.68 52 Week Low $9.43 Data as of 03/07/08 4:00 p.m. ET Minimum 20 minute delay Refresh quote Bottom of Form Top of Form S&P 500 Exchange INDEX Price 1293.37 Change (%)   10.97 (0.84%) Volume 0 Today's Open 1301.53 Previous Close 1304.34 Intraday High 1313.24 Intraday Low 1282.43 52 Week High 1576.09 52 Week Low 1270.05 Data as of 03/07/08 4:00 p.m. ET Minimum 20 minute delay Refresh quote Bottom of Form RECENT NEWS Motorola Announces Departure of Stu Reed SCHAUMBURG, Ill. -- March 7, 2008 -- Motorola, Inc. (NYSE: MOT) today announced that Stu Reed, formerly the president of Motorola’s Mobile Devices business, has decided to leave the Company, effective immediately. Mr. Reed and his team launched a number of key initiatives important to the Mobile Devices business that the Company will continue to drive and expand upon. Prior to Mr. Reed’s role as Mobile Devices president, he led the transformation of our supply chain organization, which encompasses the global operations associated with procurement, new product introduction, manufacturing and customer fulfillment. In addition, Mr. Reed also helped the Company generate significant cost savings by consolidating suppliers and implementing a comprehensive supply chain strategy. “Motorola appreciate Stu’s many contributions to Motorola and wish him the best in the future,” said Greg Brown, president and chief executive officer. Isle Of Man Pockets Motorola’s Covert TETRA Terminals Motorola to supply Isle of Man Department of Home Affairs with covert TETRA radios DOUGLAS, Isle of Man – 5th March 2008 – Motorola, Inc. (NYSE:MOT) has been chosen by the Isle of Man Government Department of Home Affairs to supply a fleet of covert TETRA terminals. Motorola will supply the covert devices in mid 2008, which will be used by the Isle of Man Constabulary and Customs & Excise. Motorola worked closely with a number of public safety users including the Isle of Man Department of Home Affairs, Isle of Man Constabulary and Isle of Man Customs & Excise during the design process to ensure it delivered a covert TETRA radio that met the special needs of the users. The new TCR1000 TETRA Covert Radio will help improve operational effectiveness as the small ergonomic design means officers do not feel as though they are wearing a radio, helping them to disguise their equipment during covert operations. “At last Motorola have a covert radio that is fit for purpose,” says Robert Williamson, technical director, Isle of Man Department of Home Affairs. “TETRA is a very appropriate communications technology for policing activity, but until now Motorola have not had a suitable form factor for covert operations. Motorola’s innovative TETRA radio design will be of real benefit in everyday covert activities. Our users are delighted with the new covert set.” The small, lightweight design of the TCR1000 Covert TETRA terminal incorporates many innovative features to address the unique requirements of covert users such as discrete audio, radio control and battery lifetime. Despite the compact design, the Motorola covert TETRA radio performs to the same high standards as more mainstream Motorola TETRA terminals and offers excellent functionality including options for integrated GPS and end to end encryption. Manuel Torres, vice president and general manager, Motorola Government & Public Safety, EMEA added: “Our close collaboration with the Isle of Man authorities has been a vital element in producing such a compact, powerful and well-suited covert radio. Those that’ll actually be using the radios have been very enthusiastic about the radio during the extensive and robust evaluation process, and Motorola’re rightly proud of having developed such a well-received product.” REFERENCE Charles W.L.Hill, Gareth R.Jones, STRATEGIC MANAGEMENT THEORY, Houghton Mufflin publications. U.S. Bureau of Labor Statistics, 2004-05 Career Guide to Industries and 2004-05 Occupational Outlook Handbook http://www.motorola.com/ Annual Report - Motorola http://college.hmco.com/hjinstruct/powerpt/ch03/tsld029.htm http://college.hmco.com/hjinstruct/powerpt/ch03/sld029.htm Read More