Handset unit saps Motorola’s FY 2008

Tue, 02/03/2009 - 7:25am
Brian Santo

Motorola’s handset operation continues to drag the company down. The unit’s sinking sales translated into a 2008 loss nearly 10 times bigger than its relatively modest 2007 loss.

The company’s board suspended quarterly dividends, effective immediately.

Sales in the Home & Networks Mobility unit, which supplies equipment to the cable market, were actually up a percentage point for the year, though fourth-quarter revenue was down 5 percent from the year-previous Q4 2007. Meanwhile, the Enterprise Mobility segment was up for both 2008 and the most recently completed fourth quarter.

The Mobile Devices segment is Motorola’s anchor, with fourth-quarter sales off by half from a year ago and down 36 percent for the entire year.

Motorola as a whole turned in a 2008 loss of $4.1 billion; the Mobile Devices operation was responsible for $2.2 billion of that. Motorola’s 2007 loss was $49 million, with Mobile Devices tallying a $1.2 billion loss.

Greg Brown, Motorola’s president, co-CEO and CEO of Broadband Mobility Solutions, and Sanjay Jha, co-CEO and CEO of Mobile Devices, issued a joint statement that said: “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.”

Motorola was on a path to sell the Mobility Devices segment, but could not find a buyer.

The company provided the following highlights for its Home & Networks Mobility fourth quarter:

  • Expanded operating margin to 9.9 percent of sales from 7 percent of sales in the year-ago quarter
  • Shipped 4.7 million digital entertainment devices, compared with 3.4 million in the year-ago quarter, due to continued strong demand for HD, HD/DVR and IPTV devices
  • Continued to make progress in 4G technologies, including initial sales on WiMAX and completion of industry’s first over-the-air Long Term Evolution (LTE) data sessions in the 700MHz spectrum

The company also named Edward J. Fitzpatrick, its senior vice president and corporate controller, acting chief financial officer, effective immediately, replacing Paul J. Liska, former CFO. Motorola said it has initiated a search to identify a replacement.

Motorola’s outlook for the first quarter is a loss of 10 cents to 12 cents per share. This outlook excludes charges associated with the company’s operating expense reduction initiatives, as well as any other items of the variety typically highlighted by the company in its quarterly earnings releases.

More Broadband Direct 02/03/09:
•  Cox gets LSA contract in Virginia
•  Handset unit saps Motorola's FY 2008
•  Silicon Image joins MoCA
•  Cable Show '09 sessions to feature top cable execs
•  WICT names '09 chapter presidents, advisors
•  FairPoint customers lose e-mail service in switch
•  Broadband Briefs for 02/03/09



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