Business Insight Zone

Consider two old-school titans of American high-tech business — Hewlett-Packard and Motorola.

Imagine that exactly ten years ago, in the run-up of the tech/dot-com boom, you had bought equal amounts of each stock, figuring that both of them would benefit from the burgeoning activity in the tech sector, and that both of them provided you with the sort of “margin of safety” that Warren Buffett has always sought, thanks to their standing in American industry, the strength of their brands, their patent portfolios, etc.

The more dramatic of the two companies in the intervening ten years, I would argue, has been Hewlett-Packard, especially with its 1999 spinoff of Agilent (regarded skeptically by some at the time) and its 2002 acquisition of Compaq (regarded more than skeptically by many at the time). Compared to those moves, and even considering its 2004 spinoff of Freescale Semiconductor, Motorola’s trajectory has been tame.

But disastrous. Compare this 10-year chart of HP . . .

To this 10-year chart of Motorola . . .

This chain of thinking is inspired by this morning’s headlines about Motorola:

• MarketWatch: Motorola to post loss, cut 4,000 jobs: Wireless-phone sales fall even sharper than expected
• Reuters via the IHT: Motorola to cut more jobs as sales decline

It’s time (or past time) to dismember the company. Motorola’s long, distinguished history can’t save it from market irrelevance under its current configuration. What shape it needs to take, I don’t know. But it’s not this.

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Related posts:

• When do you kill a business? (See the last item in the post.)
• Mark Hurd’s 3-minute management clinic.
• Phase A and Phase B.
• Zander’s departure at Motorola.

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Category: Manufacturing & Heavy Industry, Technology