Motorola has warned it will make a loss in Q4 2001.
US telecoms equipment and semiconductor group Motorola announced on Wednesday that it expects to make a loss in Q4 this year. However, it sees signs of recovery in both the mobile handsets and semiconductor markets. The company also said its mobile phone business actually returned to profitability in Q3, although it is still far behind market leader Nokia both in sales and margins.
The announcement comes amid rumors that Motorola and German industrial group Siemens are in discussions to merge parts of their mobile divisions, in a venture similar to the Sony/Ericsson deal finalized last week. The Swedish and Japanese mobile companies have merged their handset production and products resulting from the joint venture are expected in 2002.
A joint venture between Motorola and Siemens would strengthen their combined position in the market on both sides of the Atlantic. Siemens has been working towards being the second player in Europe after Nokia, while Motorola is also in a similar position in North America.
In addition, the two players could leverage each other’s strengths for improved performance in the mobile industry. Motorola has extensive capability and capacity in mobile components, due to its semiconductor strength, while Siemens has extensive production capabilities. A well-coordinated joint-venture could yield both companies economies of scale in production and development.
Siemens and Motorola have declined to comment whether or not any such discussions are under way. But it’s clear from Motorola’s still mediocre forecasts for next year that a deal to save money and boost revenue potential for both companies could prove timely.
If a Motorola/Siemens joint venture did take shape, then Nokia might have to consider whether it could benefit from a partner of its own in the face of intense market consolidation. If so, an alliance with a Japanese provider with a strong 3G offering might benefit the Finnish firm, which has lagged behind in higher-speed devices. Its first GPRS handset has still not hit the mass market.
