While there was no breakdown within Motorola’s Home and Networks Mobility numbers, it looks like the two core, but unrelated businesses, providing wireless networks and the one we are most interested in, providing Pay TV operators with network equipment and CPE devices, performed way under the rest of the industry and it may well have lost significant US market share.
Home and Networks Mobility said that it shipped 3.3 million digital entertainment devices, down 20% from 4.1 million devices shipped in the third quarter of 2008, while in the immediately previous quarter Motorola shipped 3.7 million, which was an even bigger fall of 27% from the previous year, when it shipped 5.1 million devices in that quarter.
Nothing in the market is telling us that set top shipments or investments in infrastructure (mostly cable) is being scaled back quite that aggressively, and especially not in the US, so this potentially is some market share loss going on. You can take either view, that this means that Cisco and its Scientific Atlanta subsidiary is doing better due to its parentage and scale, or that Motorola set tops are having a bad time by being associated with the failing handset business. If it was the latter, then the fact that Motorola made a profit for the quarter, mostly through scaling back costs, and that it has two hot new phones out, may mean that over the next two quarters Motorola begins to either grow, or at least stop shrinking so fast.
Motorola says that the demand for HD has been driving its business, so perhaps it was shipping less devices at a higher value, but it also says that due to economic conditions demand is slowing in 2009, particularly in the US.
However the Home and Networks Mobility segment of Motorola was down 15% to $2.0 billion where it makes up 37% of the entire company’s business, compared to $2.4 billion in the third quarter of 2008. The 15% decrease comes from a 24% decrease in sales in the home business and just a 7% decrease in sales in networks.
Furthermore the 24% fall in the home business was caused by a 20% decrease in shipments and a lower ASP due to a product mix shift. So despite HD being in demand, it’s not at a premium price after all.
Cisco also doesn’t break this business out, but back in its year end September 30 figures it said that sales were flat against 2008, and that 2008 had been up over $355 million on the previous year. It said that in Video Systems there were increased sales of IP set-top boxes, but this was offset by lower sales of HD-DVR cable set tops.
Video Systems within Cisco are clustered inside Advanced Technologies which did $9.2 billion for the year compared to $9.6 billion in 2008, hardly the level of collapse that Motorola is looking at, more like 3% or 4%.
While none of this is conclusive it would appear that slowly US cable is pulling away from being dominated by Motorola, while the company itself sees the wider opportunity outside of the US, in IPTV and Euro DOCSIS.
During the past month Motorola has launched what it calls the Communications Convergence Engine Enhanced Asset Management System, software for delivering the same video assets to any device, and its next-generation SURFboard DOCSIS 3.0 modems, which can run at up to 300 Mbps.
Overall revenue for the quarter for Motorola was $5.5 billion, down 27% from this time last year, but it made an operating profit of $128 million, compared to a loss last time of $452 million, with Home and Networks Mobility contributing $199 million of that (Handsets made a loss) and it lifted its cash balances by $700 million to $7.2 billion. It had net earnings of just $12 million.
The Mobile Devices segment had sales of $1.7 billion, down 46% compared to the year-ago quarter and an operating loss of $183 million on 13.6 million handset shipments.