Motorola Losses Mount As Phone Sales Slip

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Motorola Tuesday suffered a massive fourth-quarter loss, as its mobile device sales plummeted 51 percent compared with the same quarter a year ago.

Motorola reported a loss of $3.6 billion for the fourth quarter, or $1.57 per share, and reported $7.14 billion in revenue, a 26 percent drop from the year before. In its Mobile Devices division, Motorola's revenue fell to $2.35 billion, a 51 percent drop.

For the full year, mobile device sales nose-dived 36 percent to $12.1 billion compared with 2007. In the quarter, Motorola shipped 19.2 million handsets and estimated its global market share in mobile handsets is now roughly 6.5 percent.

Despite the device drop, Motorola said it is on target to launch several next-generation smartphones and devices during the fourth quarter of 2009. Though specific details were not released, Motorola has said it will hang its hat on developing new mid- and high-end devices this year centered on the open-source Google Android mobile operating system and Microsoft's Windows Mobile operating system. That move comes as Motorola struggles to compete with low-end device makers such as Nokia, LG and a host of others. Sanjay Jha, Motorola co-CEO and CEO of the Mobile Devices unit, said social networking features will be integral to Motorola's future mobile device road map.

In addition, Jha said Motorola will continue to cut costs in its Mobile Devices division, expecting to save more than $1.2 billion in 2009.

"We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio," Jha said in a statement. "We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone road map."

Along with Mobile Devices, Motorola's other divisions also suffered in the fourth quarter, with Home and Networks Mobility sales dropping 5 percent to $2.6 billion compared with last year, though full-year sales were up 1 percent from 2007 to $10.1 billion.

Motorola's Enterprise Mobility Solutions division, however, bucked the trend, with sales jumping 4 percent for the fourth quarter to $2.2 billion and full-year sales up 5 percent to $8.1 billion.

"Despite the challenging economic environment, our Broadband Mobility Solutions businesses performed very well in the fourth quarter and throughout the year," said Greg Brown, Motorola's president, co-CEO and Broadband Mobility CEO, in a statement. "Throughout 2009, aggressive cost management and prioritizing our investments will be a top priority. These actions, as well as our strong portfolio of outstanding products and solutions, will help us build on our leadership positions in the broadband, video, public safety and enterprise mobility solutions markets."

Looking to the first quarter of 2009, Motorola said it expects losses, excluding reorganization costs. Losses are expected to continue at between 10 cents and 12 cents per share. Motorola didn't forecast past the first quarter.

Schaumburg, Ill.-based Motorola has been aggressively cutting costs to combat the economic downturn. Last month, the company said it would cut 4,000 jobs, or 6 percent of its workforce. The latest round of cuts came just months after Motorola slashed 3,000 jobs. Motorola also said it would suspend its quarterly dividend.

"In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices. The cost-reduction actions underway are expected to generate aggregate savings of approximately $1.5 billion in 2009," Brown and Jha said in a statement.

Motorola also said it is looking for a new CFO to replace Paul J. Liska, who resigned. On Tuesday, Motorola named corporate controller Edward J. Fitzpatrick as interim CFO.

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