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Google: Motorola Still A Work In Progress

Google admits it still has a lot to accomplish with its Motorola handset business, asks investors for patience.

Google on Tuesday asked investors for patience in turning around its Motorola smartphone business. During its recent quarterly earnings call, Google execs said that Motorola had 12 to 18 months of products in the pipeline when the acquisition was finalized, and that it will take time to see new devices and positive results.

Google posted $14.42 billion in earnings during the fourth quarter of 2012, but Motorola, which Google operates as a separate company, contributed a loss to the overall results. Google expects this to change. Eventually.

"We're not in the business of losing money with Motorola," said CFO Patrick Pichette. "We're 120 days into this journey, and we've inherited 12 to 18 months of product pipeline. With product restructuring, it does take time for new product to show up. Be ready for a lot of fluctuation in our P and L [profit and loss statements] over the next quarter," he warned. "It's just the nature of the beast when you're reinventing a business."

[ The smartphone wars rage on. See the latest: iPhone Beats Android In U.S. Market. ]

Wireless network operators plan their devices at least a year in advance, so learning that Motorola had 12 to 18 months of commitments for new phones is no surprise. What Pichette meant by "reinventing a business" is anyone's guess.

Google has said time and again that there is a "firewall" between its Android operating system business and its new Motorola hardware business. It doesn't want to upset or jeopardize its relationships with partners such as Samsung, LG, Huawei, ZTE, Sony and others. Even so, Google will surely exert some influence on the direction that Motorola takes its smartphones and other hardware.

Ever since news of Google's interest in Motorola broke in August 2011, reports (or fantasies?) of a Motorola-designed Nexus phone have been circulating around the Internet. So far, such a phone has not come into being. For the moment, the only Nexus smartphone available is made by LG. Google also sells two Nexus-branded tablets, one made by Asus and the other by Samsung.

Google didn't provide any other information about Motorola and its plans for the company, other than to say its restructuring is ongoing. In recent months Google has announced office closures, manufacturing facility sales and headcount reductions.

Hopefully Google will have some good news to share when its I/O developer conference arrives in May.

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J. Nicholas Hoover
J. Nicholas Hoover,
User Rank: Apprentice
1/24/2013 | 3:23:03 PM
re: Google: Motorola Still A Work In Progress
I find it amazing that handset manufacturers are able to plan their handset releases 12 to 18 months in advance in an era where innovation is so rapid. I wonder if the closer you get to that 12 or 18 months, the rougher the pipeline actually is and the more leeway Google has to tweak the hardware. I guess we'll see later this year.
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