Parts Shortage Slow Down Delivery of Motorola Camera Phones
Dec 5, 2003
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Motorola Inc. (Schaumburg, IL, U.S.), said to be the world's number two cellular phone maker, has reported that parts shortages were slowing down its deliveries of new camera phones, but the company is blaming a lack of sensors for part of the delay.

Motorola spokesman Alan Buddendeck said a shortage of lenses was the main culprit in the delays, although another factor to a lesser extent was a lack of CMOS image sensors, which are used in all of Motorola's camera phones.

"Unit volumes...are lower than our customers are asking for, due to supply constraints for the integrated-camera components," Tom Lynch, head of Motorola's cellular phone business, said in a statement. "We are doing everything possible to accelerate the supply of camera components."

Investors and analysts, however, said the parts shortage was no excuse, and Motorola was not managing its supply chain well enough.

"You could say parts shortages and it sounds like something completely out of your control, but when you're designing your handsets, it's an execution issue," said Shawn Campbell, a principal with Chicago, IL, U.S.-based Campbell Asset Management, which owns Motorola preferred and common shares.

"You should have foreseen the (strong) demand," Mr. Campbell added. "You should have foreseen potential parts shortages, and you should have taken steps months ago to ensure you didn't have those supply chain issues."

However, Mr. Lynch defended Motorola by saying, "We had a primary supplier (of lenses) and they just have not been able to deliver to the level that we needed. As a result, we brought on two additional suppliers and...they are pulling out all the stops to help get us components."

Motorola emphasized that the delays will not affect its fourth-quarter financial results. It backed its previous fourth-quarter outlook at a Dec. 2 Credit Suisse First Boston conference in Arizona, U.S.

Officials with the company said demand for the camera phones is strong in North America, Europe, and Asia. "Everyone wants these phones," said Geoffrey Frost, Motorola's chief brand officer. (Reuters)

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