Motorola Earnings Fall As Sales Drop 39%
CHICAGOÂ – Motorola Corp. said Thursday that a 39 percent drop in sales at its cellular-phone unit gave the company a hefty first-quarter loss, and the Schaumburg communications products giant warned that second-quarter results will fall short of analysts’ current expectations.
Motorola’s shares dropped 30 cents, or 3.14 percent, on Thursday to close at $9.25.
In the latest quarter, Motorola recorded a net loss of $194 million, or 9 cents a diluted share, in the latest period. That compares with a loss from continuing operations in the year-ago period of $218 million, or 9 cents a share. (A small profit from since-discontinued operations trimmed a penny from last year’s loss, reducing Motorola year-ago net loss to 8 cents s share.)
Revenues tumbled 21 percent to $7.45 billion from $9.43 in the year-earlier period. At the company’s cell phone group, which continues to lose market share, sales fell 39 percent to $3.3 billion from $5.41 billion _ and single-digit upturns in sales at Motorola’s other segments couldn’t offset that slide. The handset group’s operating loss worsened to $418 million from $233 million a year ago.
Excluding a 4-cent-a-share charge linked to Motorola’s latest round of cost-cutting workforce reductions, the company’s latest loss was 5 cents a share, not quite as bad as the 7 cents analysts had been anticipating.
Company officials also indicated that they expect a second-quarter loss, excluding special items, of 2 to 4 cents a share, worse than the penny-a-share loss Wall Street has been expecting.
Motorola’s cell phone group has lost ground against rivals like Nokia in the competitive global handset market, and the company recently announced plans to split off the once highly profitable operation as a free-standing public company. Activist investor Carl Icahn, holder of a 6.4 percent Motorola stake, had been vociferously promoting the spinoff.
"During the first quarter, we made an important strategic decision to separate the Company, creating two independent, publicly traded entities," noted Greg Brown, who was named president and chief executive officer recently as part of a management shakeup.
"Improving the product portfolio in Mobile Devices and positioning both businesses for future success remains a top priority," Brown said. "Our Home and Networks Mobility and Enterprise Mobility Solutions businesses continue to expand their portfolios of solutions, grow internationally and deliver solid financial results."