Motorola 1Q Loss Widens, Sees More Red Ink in 2Q
Motorola on Thursday posted a slightly wider first-quarter loss as the red ink worsened at its struggling handset business amid plunging sales.
The company also projected a second-quarter loss worse than analysts were expecting, helping send shares down 3.7% to $9.20 in premarket trading.
The cellphone manufacturer reported net loss of $194 million, or 9 cents a share, compared with prior-year net loss of $181 million, or 8 cents a share. The latest results include 4 cents in net charges, while the prior year had a 1-cent gain from discontinued operations and 11 cents in various charges. In January, Motorola projected a first-quarter loss excluding charges of 5 cents to 7 cents a share.
Net revenue fell 21% to $7.45 billion.
The mean estimates of analysts polled by Thomson Reuters were for a loss of 7 cents on $7.75 billion in revenue.
Gross margin rose to 28.8% from 26%.
The company shipped 27.4 million handset units in the quarter, down 40%. Revenue in the mobile-devices unit plunged 39% as it widened its loss to $418 million from $233 million. Motorola warned in January the handset sales decline would be steeper than from typical seasonal fluctuations, citing slowing demand for some of its products, including newly introduced phones.
In late March, the company announced plans to split off the handset business into a separate publicly traded business in 2009, relenting to demands by activist investor Carl Icahn. The move would create an independent mobile devices company, leaving standing alone a company that makes TV set-top boxes, wireless equipment, public-safety radios and bar-code scanners. Chief Executive Greg Brown has said the split will enhance the pace of the handset business' turnaround.
In the home-and-network mobility business, which makes cable-television equipment and gear for cellphone carriers, revenue increased 2% as earnings dropped 8.4%. At the enterprise-mobility unit, which makes public-safety radios and bar-code scanners, revenue climbed 5.2% as earnings surged 91%.
Motorola forecasted a second-quarter loss of 2 cents to 4 cents a share, excluding items. Analysts were expecting a 1-cent-a-share loss.
"Improving the product portfolio in mobile devices and positioning both businesses for future success remains a top priority," Brown said.
The CEO has had his hands full to turn around troubled Motorola. The company had focused on trying to find ways to improve its troubled handset business, which fell behind its peers on third-generation handsets, and has sputtered since the decline of the Razr phone. The unit's decline drove a string of disappointing quarters that led to the ouster last fall of former CEO Ed Zander.
-By Donna Kardos, Dow Jones Newswires; 201-938-5963; donna.kardos@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 24th April 2008
