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14 MOTOROLA, INC.
Motorola reported special items resulting in a net charge of $481 million, including net special charges
of $770 million in the Personal Communications Sector (PCS) relating to the discontinuation of older wireless
telephone products as part of an ongoing product portfolio simplification strategy and the downsizing of vari-
ous manufacturing operations. These items reflect some of the actions that are necessary to improve PCS
financial performance. Having anticipated a softening in economic activity, we began implementing cost reduc-
tions in the third and fourth quarters of 2000, and we are taking additional actions in 2001. These actions
have been designed to adjust our costs to softening global market conditions and, as the market recovers, to
restore the trend of improved profitability that we had achieved over the last two years.
Sharpening customer focus, improving profitability At the beginning of 2001, we announced a new organiza-
tional structure to intensify customer satisfaction and improve profitability.
The newly formed Global Cus to me r So lutions Ope rations (GCSO) strengthens our market position by ensuring
delivery of complete customer solutions. Joseph M. Guglielmi, formerly president of the Integrated Electronic
Systems Sector, is president of the new organization. GCSO is designed to reposition Motorola as the leader
in customer care by directing software and content strategies, systems integration, customer support and
service, marketing and branding strategies, and regional operations.
The Communications Enterprise has been phased out. The Pe rs onal Communications Se ctor now reports
directly to the Office of the Chairman. Mike S. Zafirovski is president of the sector. He joined Motorola in June
2000 from General Electric Co., where he had most recently been president of GE Lighting. The new Ne tworks
Se cto r includes the Broadband Communications Sector (BCS), the Commercial, Government and Industrial
Solutions Sector (CGISS), and the Global Telecom Solutions Sector (GTSS). President of the new organization
is Edward D. Breen, who was chairman, president and chief executive officer of General Instrument Corporation
until its merger with Motorola in January 2000. The Networks Sector also reports to the Office of the Chairman.
The Personal Communications Sector is going through a series of major transitions to improve its market
share and financial performance. While sales increased 11% in 2000, the wireless phone industry grew more
rapidly. Operating profit margins declined to a disappointing 3%. (All comparisons are from ongoing operations,
excluding special items.) PCS canceled 44 products in 2000 as it began discontinuing analog phone and
The DCT2000 digital set-top terminal is the gateway for a
wealth of new interactive services such as video-on-demand,
Internet access, e-mail and home shopping.