Motorola to Consolidate After Q3 Loss
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Motorola is postponing the spin-off of its mobile division initially planned for third quarter of 2009 after reporting less than encouraging financials today.
The struggling handset maker said it would refocuse mobile device development on two platforms, Android and Windows Mobile, and cut costs.
Motorola (NYSE: MOT) is also consolidating mobile device chipsets to two technologies, TI and Qualcomm, and expects to launch its first Android smartphone in the fourth quarter of next year.
Motorola reported a net loss of $397 million for the third quarter, or 18 cents per share, compared to 3 cents a share on a profit of $40 million in the same, year ago quarter.
Revenue dropped 15 percent, to $7.48 billion, compared to the same time last year, slightly below analysts' expectations of $7.8 billion for the third quarter.
Sales in the mobile devices unit were $3.1 billion, down 31 percent compared to third quarter of 2007.
Motorola shipped 35.4 million handsets and 16 new products in the third quarter. The most recent product is the Krave ZN4, the first Motorola US-based device featuring a touch screen display.
During this morning's earnings call, co-CEO Greg Brown said the company's balance sheet and liquidity position would provided Motorola the "agility and flexibility" to weather the economic downturn. That's code for saying there's enough cash to fund operations while the company restructures.
Jha said the business news around mobile device technology reflects a "productive start" to Motorola regaining market success.
Going forward Motorola expects the challenges to continue into early 2009, expecting earnings in the range of 2 cents to 4 cents per share in the fourth quarter, with full year earnings per share ranging from 5 cents to 7 cents.
"We are on a new course and differentiated products and sustained financials will improve that course," said Jha, noting "there is no quick fix" to profitability. p>IDC said the top five mobile phone vendors are Nokia, Samsung, Sony Ericsson, Motorola and LG. Motorola currently holds 8.5 percent market share, a drop from its third quarter 2007 share of 12. 8 percent.