Motorola And Nokia Financial Analysis

903 words - 4 pages

For the financial analysis, I selected Motorola and Nokia. The two companies control a dominant share of the cellular handset market. Successful competition in the cellular equipment industry requires companies that can plan for change, identify their worldwide position, and recognize trends in their financial results and in the tastes of their customers.Company OverviewsMotorola, founded in 1928, was originally known as Galvin Manufacturing Corporation, after its founder Paul V. Galvin (Motorola, 2004). The company's first product was a battery eliminator and has proven for over 75 years that it is a global leader in wireless and broadband technologies. In the 1930's, Paul Galvin created the Motorola brand name for the company's new car radio. The name linked the word "motor" with the suffix "ola," meaning sound (Motorola, 2004). After its initial public offering in 1943, Galvin Manufacturing Corporation was renamed Motorola, Inc. in 1947. The company currently holds the largest market share among handset manufacturers in the United States and China, but lags with only six percent of the market in Europe (Rose, 2003). In addition to mobile phone handsets, Motorola also manufactures a wide range of licensed and unlicensed band wireless radios for use with data, law enforcement and emergency services communication.Nokia, named for a small village on the river Emäkoski in southern Finland where it was founded, began as a wood pulp mill in 1865. The company, originally the Finnish Rubber Works, began using the Nokia brand in the 1920s. The company expanded into electronics with the purchase of Finnish Cable Works after World War II drove up the demand for power transmission and telecommunications networks. The Cable Works division formally established an electronics division in 1960. The modern-day Nokia was formed in 1967 when the separate divisions combined to form a single public company, Nokia Group (Nokia, 2004).Unlike Motorola, whose financial results rely on a range of products other than handsets, Nokia focuses on supplying mobile telephones, accessories and mobile/fixed IP network infrastructure products. According to Hoover's Online, Nokia is the "world's #1 maker of cell phones (ahead of such rivals as Motorola, Siemens, and Samsung among others)." (Hoover's Online, 2004).Nokia's revenues are divided among its four primary divisions: mobile phones (wireless voice and data devices for personal and business uses), multimedia (set-top boxes, home satellite systems, and mobile gaming devices), networks (wireless switching and transmission equipment used in carrier networks), and enterprise solutions (wireless systems for businesses). Like Motorola, Nokia operates a wholly-owned arm, Nokia Ventures, to invest in technology-related startup companies.Key Financial InformationWhile Motorola and Nokia use different SIC codes to identify their primary businesses, both companies compete in the telecommunications equipment sector. In terms of...

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