Motorola posts widening losses

24-04-2008

by Charlie Taylor

Motorola has reported a first quarter loss on the back of dwindling sales of mobile devices.

The firm, which recently announced plans to lay off a further 2,600 employees as part of its cost-cutting programme, said on Thursday that losses widened to USD194 million, or USD0.09 a share. This compares to a loss of USD181 million, or USD0.08 a share, for the first quarter of 2007.

First-quarter sales for the US company reached USD7.45 billion, down 21 percent from the USD9.43 billion recorded for the same quarter a year ago.

Motorola's money-draining handset division continued to drag down the firm, with mobile device sales declining by a staggering 39 percent year-on-year. The company's share of the global handset market is now estimated to be 9.5 percent, down from 17.5 percent a year ago.

Operating losses for the handset division totalled USD418 million, compared to a loss of USD233 million in the year-ago quarter.

Sales in the mobile devices segment totalled USD3.3 billion with the firm shipping some 27.4 million handsets during the quarter. This compares with 40.9 million shipped during the last quarter of 2007 and 65.7 million in the fourth quarter of 2006.

Late last month, Motorola announced it was to split into two separate companies -- one selling infrastructure and networking equipment, the other left to struggle to sell handsets. The split is expected to be completed during 2009.

"During the first quarter, we made an important strategic decision to separate the company, creating two independent, publicly-traded entities," said Greg Brown, president and chief executive officer.

While handset sales were down during the first quarter, enterprise mobility revenue grew 5 percent to USD1.8 billion while networking equipment revenues were up 2 percent to USD2.4 billion.

"Improving the product portfolio in mobile devices and positioning both businesses for future success remains a top priority. Our home and networks mobility and enterprise mobility solutions businesses continue to expand their portfolios of solutions, grow internationally and deliver solid financial results," added Brown.

Motorola has said it expects to post a loss from continuing operations of between USD0.02 to USD0.04 per share for the second quarter.

The company's shares fell by over 4 percent in early trading on Wall Street on Thursday following the publication of its first-quarter results.