Motorola 2001 Annual Report Download - page 6

4MOTOROLA, INC.
4. Growth through innovative products, software applications, customer relationships.
We’re providing our customers with the solutions they demand: a portfolio of
24 exciting new wireless telephone products; driver information systems, such as
the OnStar®system; new digital cable set-top products; next-generation wireless
technology; silicon-to-software solutions.
5. Continuous reevaluation of our strategy as the high-tech environment changes.
Examples of this include the divestiture of businesses no longer key to our strategies;
acquisitions of companies that strengthen our strategic position; and the decision
to license our technologies more aggressively to other companies to generate
royalty income.
The changes we are making now are fundamentally different than the
changes we made in the past. We’ve taken the tough, necessary steps to improve
our cost structures, institute new efficiencies across the corporation, focus on
generating profit and positive cash flow, maintain a low break even point and
enhance our balance sheet.
2001 was the first year in the history of the cellular industry in which handset
sales declined. Despite this, our Personal Communications Sector (PCS) retained
the number-two worldwide market share, improved that market share from 15%
at the end of 2000 to 17% at the end of 2001 and returned to profitability in the
fourth quarter of 2001. We are the number-one handset provider in the rapidly grow-
ing China market. PCS expects further improvement in performance by driving:
•The implementation of our platform design strategy;
•Aggressive reductions in our product portfolio and parts complexity;
•Increased margins for new products; and
•Markedly improved relationships with operators.
In 2001, the wireless infrastructure industry also experienced its first year ever
of decline, dropping 23%. The focus of our Global Telecom Solutions Sector (GTSS)
is back to basics. As part of the drive toward operational excellence, the sector will
increasingly focus on providing margin-enhancing, value-added software and services
to its large installed base of customers. GTSS has won contracts and is deploying
next-generation wireless technology, such as GPRS, CDMA 1X and UMTS.
While the cable equipment industry saw a softening of demand in 2001,
the Broadband Communications Sector (BCS) retained a strong market share and
technology position. We believe the cable equipment market will resume growth
during the second half of 2002 due to significant opportunities outside of North
America. The European market in particular presents significant opportunity
over the next few years.
In 2001, we took tough but necessary
steps throughout the corporation to
improve our cost structure, institute
new efficiencies and enhance our bal-
ance sheet. Meanwhile, PCS improved
both its market share and profitability;
GTSS continued its drive to achieve oper-
ational excellence and develop more
value-added services for customers; and
BCS bolstered its leadership position
through acquisition.