Motorola Posts Wider Loss as Phone Shipments Decline

Motorola Inc. posted a wider loss and may lose more money this quarter than analysts estimated, hurt by a lack of new mobile phones to compete with Apple Inc. and Nokia Oyj.

The stock declined 3.1 percent after Motorola, the largest U.S. mobile-phone maker, said its first-quarter net loss expanded to $194 million, or 9 cents a share. Revenue fell to the lowest level in four years, trailing estimates.

Phone shipments plunged 40 percent as Motorola's Razr 2 and Z8 failed to keep buyers away from Apple's iPhone and a Nokia handset that has satellite-navigation. Chief Executive Officer Greg Brown, bowing to pressure from investor Carl Icahn, decided last month to spin off the handset unit to focus on TV set-top boxes, two-way radios and wireless-networking equipment.

``There's no part of this company that's really doing very well,'' Joan Lappin, president of Gramercy Capital Management in New York, said in an interview with Bloomberg Radio. ``This was a company with one of the great American brand names. There's just nothing special going on there any more.'' Lappin sold Motorola shares in 2006.

Sales growth in the non-phone businesses shrank in the quarter, showing that splitting off the phone unit may not help Motorola as much as Brown expects. Nomura International analyst Richard Windsor in London said those businesses may suffer this year amid a U.S. economic slump.

Motorola dropped 30 cents to $9.25 at 4:01 p.m. on the New York Stock Exchange. The Schaumburg, Illinois-based company has declined 42 percent this year.

Loss Forecast

The company forecast a second-quarter loss, excluding costs for job cuts, of 2 cents to 4 cents a share, falling short of analysts' projections for a break-even quarter.

First-quarter revenue declined 21 percent to $7.45 billion, trailing the $7.79 billion average of estimates compiled by Bloomberg. Shipments fell to 27.4 million units, compared with the 34 million estimate of Morgan Keegan & Co. analyst Tavis McCourt in Nashville, Tennessee.

``We knew it would be weak, but the degree of weakness in mobile phones was surprising,'' McCourt said. He advises investors to hang on to the shares.

Profit at the division that sells wireless-network equipment and set-top boxes also slumped, dropping 8.4 percent in the first quarter to $153 million. Sales advanced 2 percent to $2.4 billion, slower than the previous quarter's 11 percent pace.

Growth

Revenue growth at the unit selling two-way radios for police departments and emergency personnel, scanners for retailers, and network gear for businesses also slowed, to 5 percent from 35 percent in the previous quarter.

The mobile-phone division's loss widened to $418 million from $233 million a year earlier. The unit has lost more than $1.5 billion since the start of 2007 as consumers snapped up rival devices that play music, surf the Web and capture video. That prompted former chief Ed Zander to announce his resignation in November, leaving the company in Brown's hands.

Sales at the mobile-phone unit will be little changed or ``slightly up'' this quarter from the previous period, helped by new devices, Brown said on a conference call today. The loss at the unit will be similar to that of the first quarter. Sales at the other businesses will increase, he predicted.

``The overall trends for those businesses and their respective performances are pretty good,'' Brown said in an interview today. ``They are getting more and more of their growth internationally.''

Expenses

Excluding costs for 2,600 job cuts, the first-quarter loss was 5 cents a share, Motorola said. Analysts on average projected a loss of 6 cents, according to a Bloomberg survey. A year ago, the net loss was $181 million, or 8 cents, the company said today in a statement.

Zander revived Motorola with the Razr, only to see its cachet fade amid gains by Nokia, Apple and Samsung Electronics Co. The Razr 2, introduced last year, has failed to match the success of its predecessor, which sold more than 110 million units since its introduction in 2004.

Yesterday, Cupertino, California-based Apple reiterated plans to sell 10 million iPhones this year after selling almost 4 million last year. The device, which combines a Web-browsing mobile-phone with the iPod media player, went on sale in June.

Market Share

Motorola's handset market share shrank to 9.5 percent last quarter, with the biggest decline in North America, Brown said today. Motorola's share of global phone sales fell to 11.9 percent in the fourth quarter from 21.5 percent a year earlier, according to Stamford, Connecticut-based researcher Gartner Inc. Nokia boosted its share to 40.4 percent, and Samsung lifted its share to 13.4 percent.

To prevent Motorola from slipping further, Brown, 47, this month began selling the Z9 with satellite navigation. The company also started shipping the Rokr E8, which holds about 5,000 songs and includes a camera, Brown said today.

source : http://www.bloomberg.com/