Heavy competition hits Motorola's bottom line
18-04-2007
by Ciara O'Brien

Weak handset sales hit Motorola's results in the first quarter, as the mobile manufacturer revealed a loss for the three-month period.

The world's second biggest mobile phone manufacturer just managed to hit analysts' expectations with a loss of USD181 million, or USD0.08 a share, as increased competition in the market hit home. Excluding one-time items such as acquisitions costs, this translated into USD0.02 a share, just meeting analysts' expectations.

In March, Motorola chiefs revised their forecasts and predicted the quarterly loss, forecasting sales in the range of USD9.2 billion to USD9.3 billion, down from previous expectations of USD10.4 billion to USD10.6 billion.

Motorola's mobile devices division saw a year-on-year slump of 15 percent, achieving revenue of USD5.4 billion, with the unit posting an operating loss of USD231 million.

The US-based phone maker shipped just 45.4 million handsets during the quarter, a significant decrease from 65.7 million in the fourth quarter.

Despite the poor quarterly performance the company remained confident that it would post a profit for the full year, and predicted a profit in the second quarter of USD0.02 to USD0.03 a share, excluding one-off items. This clashes with analysts' expectations of USD0.08 per share for the coming quarter. However, the company is counting on a stronger second half.

Motorola is also due to continue its cost-cutting measures, which have already hit its Irish workforce in Cork. In March, the company announced it was slashing 330 positions from its Munster workforce as part of a global plan.