Motorola Earnings Hit by Drop in Cell-Phone Sales

84% Decline in Q4 Earnings Leads Cable-Equipment and Mobile-Handset Giant to Forecast Q1 2008 Loss
Author:
Publish date:
Social count:
0

Cable-equipment and mobile-handset giant Motorola’s fourth-quarter-2007 earnings declined 84% compared with last year, dragged down by a 38% drop in sales for its Mobile Devices segment. The company forecasted a first-quarter-2008 loss.

The Q4 earnings were another blow to Schaumburg, Ill.-based Motorola, which installed Greg Brown as its new CEO Jan. 1 after longtime chief Ed Zander stepped down under shareholder pressure and after several quarters of poor financial performance.

The company reported overall sales of $9.65 billion in the fourth quarter of 2007 and net earnings of $0.04 per share, which included $0.05 per share from continuing operations and a net loss of $0.01 per share from discontinued operations. Motorola’s forecast for the first quarter is a loss from continuing operations of $0.05-$0.07 per share.

The Mobile Devices business, which has $4.8 billion in sales, posted an operating loss of $388 million compared with operating earnings of $341 million in the year-ago quarter. Its poor performance overshadowed increased sales for Motorola’s enterprise business and its Home and Networks Mobility segment, which makes cable set-tops, modems and related equipment.

Sales for that division were $2.7 billion, up 11% compared with the year-ago quarter, although operating earnings decreased to $192 million from $223 million in the year-ago quarter. For the full-year 2007, Home and Networks Mobility sales were $10 billion, a 9% increase compared with 2006, and the segment generated operating earnings of $709 million versus $787 million in 2006.

“We are focused on aggressively rationalizing the company’s cost structure and working to get Mobile Devices back on track,” Brown said in a statement. “The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done. Our primary focus is on improving profitability and enhancing our product portfolio in this business.  At the same time, we are very pleased with the continued strong performance of our Home and Networks Mobility and Enterprise Mobility Solutions businesses.”

Motorola’s Q4 earnings from continuing operations included net charges of $0.09 per share related to a legal settlement, charges associated with previously announced work-force reductions and a write-down of assets, partially offset by tax benefits.

For the full-year 2007, Motorola’s sales were $36.6 billion. The company’s net loss was $0.02 per share, which included a net loss of $0.05 per share from continuing operations and earnings of $0.03 per share from discontinued operations.

Related