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Motorola posts loss, delays handset spin-off

Thu, 10/30/2008 - 8:30am
Brian Santo

Motorola sales continued to drop through its third quarter of 2008, with the mobile handset business continuing to be the single-biggest drag on overall results.

Motorola said it still plans to spin-off its handset business, but because of that unit’s poor performance and also the troubled world economy, it’s unlikely to make a sale by the original deadline of Q3 2009.

The company reorganized over the summer. It vowed to implement further cost reductions within the handset operation that Motorola estimates will lead to annual Motorolasavings of $800 million in 2009. The plan includes what Motorola is calling the consolidation of platforms.

Motorola’s third-quarter sales were $7.5 billion. A year ago, sales were $8.8 billion; last quarter, sales were $8.1 billion. The company posted a loss of $397 million.

Motorola’s other two segments fared relatively well. Home and Networks Mobility reported sales of $2.4 billion, down a percentage point from last year. On the other hand, the company said the unit had operating earnings of $263 million, up 65 percent compared with the third quarter of last year.

That unit shipped 4.1 million digital entertainment devices, compared with 2.7 million in the year-ago quarter, due to continued strong demand for HD, HD/DVR and IPTV devices. The operation signed deals with China Mobile Communications and Deutsche Telekom.

Enterprise Mobility Solutions had sales of $2 billion, up 4 percent from last year. Operating earnings increased to $403 million, an increase of 23 percent compared with the third quarter of last year.

Greg Brown, Motorola’s co-chief executive officer and CEO of Broadband Mobility Solutions, said: “The company had positive operating cash flow of $180 million and ended the quarter with a total cash position of $7.6 billion. Our balance sheet and liquidity position give us agility and flexibility in today’s weakened global economy and turbulent financial markets. In addition, we benefit from a global customer base and a broad portfolio of products and solutions that meet the needs of our customers.”

Home and Networks Mobility segment sales were $2.4 billion, down 1 percent compared with the year-ago quarter. Operating earnings increased to $263 million, which represents an increase of 65 percent compared with operating earnings of $159 million in the year-ago quarter.

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