Analysis of Financial Statements for Motorola Mobility Holdings

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Introduction

Motorola Mobility Holdings is a US-based company listed in the New York Stock Exchange Market. The company deals with mobile devices, end-to-end video, and data delivery. The company separated from the parent company, Motorola in early 2011. Before separation, it was operating as a mobile devices division of Motorola.

Financial performance

In as much as the wireless mobile device industry continued to grow, the financial performance of the company declined over the three years. The company faces stiff competition from well-established companies in the industry such as Nokia, Samsung, and HTC. It also faces competition from emerging markets such as China. The loss reported in 2011 increased by 189.5% from the previous year. The company has not paid dividends for several years. Further, it has no plans to pay dividends shortly. The turnover ratios indicate that level of activity of the company declined. The liquidity of the company improved as indicated by an increase in the acid test ratio from 0.41 to 1.28. The ability to repay debt improved over the two years as indicated by long-term debt-paying ratios.

Recommendations

The company needs to expand its product base. There is a high demand for broadband-enabled multi-function devices and advanced device technology, as opposed to the old analog products. Therefore, the company needs to tap this demand by producing innovative products that suit the market demand. Secondly, the company needs to use its strengths such as universal brand, strong patent portfolio, and deep customer relationship to improve the declining market share. Finally, there is a need to manage risks associated with a possible merger with Google Inc. Outcome of the merger may negatively impact the financial performance of the company.

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