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Slow cell phone sales dog Motorola’s profits

Wed, 01/23/2008 - 8:16am
Mike Robuck

Motorola announced its fourth-quarter sales and earnings today, which included an 84 percent drop in profits.

Motorola, based in Schaumburg, Ill., cited weak sales in its cell phone business as the major factor in the reduced profits. Motorola CEO Greg Brown, who took over after Ed Zander resigned earlier this month, also cautioned that turning around Motorola’s handset unit could take longer than previously expected.

“We are focused on aggressively rationalizing the company’s cost structure and working to get mobile devices back on track,” Brown said. “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 is facing increased competition from Apple’s iPhone, and the company is trailing Nokia and Samsung in the worldwide sales of cell phones.

The mobile device division’s sales were $4.8 billion, down 38 percent compared with the year-ago quarter. The operating loss was $388 million, compared with operating earnings of $341 million in the year-ago quarter. During the quarter, the company shipped 40.9 million handsets.

For the full-year 2007, sales were $19 billion, a 33 percent decrease compared with 2006, and the segment incurred an operating loss of $1.2 billion, compared with operating earnings of $2.7 billion in 2006.

Motorola’s Home and Networks Mobility division, which sells set-top boxes (STBs) and modems, was a highlight for the company. Sales for the home and networks segment increased 11 percent in the quarter, to $2.7 billion, compared with the year-ago quarter. Operating earnings decreased to $192 million, compared with operating earnings of $223 million in the year-ago quarter.

For the full-year 2007, sales were $10 billion, a 9 percent increase compared with 2006, and the segment generated operating earnings of $709 million, compared with $787 million in 2006.

Motorola’s shares dropped 16 percent, to $10.35 per share, this morning after hitting a four-year low of $10.03.

More Broadband Direct:

• AT&T offering Wi-Fi free to subs; adds new U-verse data tier 

• Slow cell phone sales dog Motorola’s profits 

• Ciena to buy World Wide Packets 

• Cisco launches new Catalyst switches, capabilities 

• Videotron picks Concurrent’s MHBOSS for VOD upgrade 

• Motorola Foundation pledges $700,000 to cable non-profits 

• Broadband Briefs for 1/23/08 

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