Motorola 1Q loss widens as phone sales fall

CHICAGO (AP) -- Struggling cell phone maker Motorola Inc. disappointed investors Thursday when it posted a wider first-quarter loss and failed to meet revenue forecasts.

The report sent shares down more than 5 percent, before they rebounded slightly.

The suburban Chicago company, which is in the midst of a massive reorganization that includes splitting itself into two publicly traded companies, said it lost $194 million, or 9 cents per share, for the quarter that ended March 31.

That's 7 percent more than a year earlier when it lost $181 million, or 8 cents per share. Excluding one-time charges related to massive job cuts, the company would have lost 5 cents per share.

Sales fell about 21 percent to $7.45 billion, down from $9.43 billion a year ago.

The performance fell short of Wall Street expectations.

Analysts surveyed by Thomson Financial predicted, on average, a loss of 7 cents per share on sales of $7.75 billion. Analyst estimates typically exclude one-time charges.

"Motorola's results were not pretty," RBC analyst Mark Sue told investors in a research note Thursday.

The company's poor performance continued to be driven by weak first-quarter cell phone sales, which slid 39 percent compared to a year earlier, continuing a two-year slump.

"As expected, the downside results were attributable to weaker-than-expected performance at the mobile devices unit," Kaufman Bros. analyst Raimundo Archibold Jr. told investors.

Motorola said Thursday that the division lost $418 million during the quarter, nearly 80 percent more than the $233 million it lost during the same period last year. The company shipped about 27 million handsets during the quarter, and its share of the global market fell below 10 percent - down from 22 percent in 2006.

But Greg Brown, who became president and chief executive this year, said he expected the company's cell phone lineup to improve in the second half of 2008 and in 2009.

"In 2009, as we transition more of our devices to our improved platforms, we will deliver a broader, more innovative and competitive customer-driven product portfolios," he said during a conference call with investors.

And he said the segment's revenue would likely stay the same or increase slightly.

That led some investors to see and end to Motorola's misfortune.

"Looking forward, however, the company guided handset revenue 'flat to up,' better than our expectations and putting on hold 'death spiral' questions for the business," wrote Cowen & Co. analyst Matthew Hoffman. "With restructuring gathering pace and the deterioration of the handset business slowing, we find it easier to look forward with the stock."

Meanwhile, the company's home and networks division, which sells TV set-top boxes and modems, saw its operating profit shrink 8 percent to $153 million.

The lone bright spot in the company's financial performance continued to be its enterprise mobility solutions division, which sells computing and communication equipment to businesses. That unit's operating profits grew 9 percent.

Motorola shares fell 36 cents, or 3.8 percent, to $9.19 in midday trading Thursday.


Comments are posted from viewers like you and do not always reflect the views of this station.
powered by Disqus
631 SW Commerce Pl. Topeka, Kansas 66615 phone: 785-272-6397 fax: 785-272-1363 email: feedback@wibw.com
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 18142634 - wibw.com/a?a=18142634