Motorola’s $342 million loss and Nokia's $150 million loss
Google’s Motorola business continues to bleed money at an alarming rate, losing $342 million in the second quarter of 2013. As can be expected, this has hurt its parent company, which today reported it missed expectations at revenues of $14.11 billion and EPS of $9.54.
The same quarter a year ago, Motorola’s operating loss was $199 million. In other words, the Q2 2013 results are more than $100 million lower than those in Q2 2012.
The question on everyone’s mind is of course: can the Moto X save the day? Given that revenues were up, $998 million this past quarter compared to $843 million in the same quarter last year, it’s certainly a possibility. It’s just not a very big one.
First of all, the latest rumors suggest the Moto X will launch in August. If true, that would give Motorola about one quarter of sales left for this year.
Even if the Moto X outsells every other phone currently available, Motorola is still spending money on pushing its other phones, all of which aren’t doing very well in today’s cut-throat market. As a result, if the Moto X is the comeback phone for Motorola, we certainly won’t see a turnaround on the financial side in 2013.
In fact, rumor has it that Google is planning to spend $500 million to market the Moto X. That alone will keep Motorola in the negative for quite some time.
While we of course don’t know how much the Moto X will end up costing the company, we do know that Motorola is betting big on it. That being said, this is very likely a long-term play, and Google has shown many times before that it has absolutely no problem losing piles of cash in its various ventures. In short, we’re not holding our breath for a Moto money-maker.
[Upadate from User Krinos]
The 1020 is a halo device, no doubt, but I don’t think anyone is really pinning their hopes on it being the recovery device for Nokia. It’s out there to present a public show of the fact that yeah, Nokia still has R&D chops, that they’re still good at making camera phones, and that they can still churn out something amazing that people should take notice of. The real meat of their sales though is going to be the Lumia 520, which actually provides something that Android OEMs haven’t really managed hit yet – a well designed, well performing good value low cost handset. It’s the other thing that Nokia was and still is good at – high quality low cost handsets – and is a surgical strike at a specific market segment – developing and pre-paid markets.
I think the Moto X may be Motorola’s corresponding device, a surgical strike at the mid-range market, a mass-market heavily marketed mid-range value device akin to the Nexus 4. I think it may be a harder slog for them though, as especially in America there’s still a decent range of devices in this market segment, including the older generation iPhones and upcoming mid-sized Androids from HTC and Samsung.