Motorola Q2 sales down across the board

Its mobile-phone sales were down by nearly half from a year earlier

Sales fell at all three divisions of Motorola in the second quarter, though the ailing communications company posted a profit based on special accounting items.

Motorola's mobile devices unit has been struggling in recent years, while its other businesses have fared somewhat better. But revenue was down for all three in the most recent quarter, with the company citing tough economic conditions as one reason for its woes.

Overall, Motorola recorded a profit of US$26 million, or $0.01 per share. But that included special items such as company reorganization and facility impairment, each of which contributed $0.02 per share to the result. Total revenue for the company was $5.5 billion, down from $8.1 billion a year earlier.

Sales in the Mobile Devices division fell 45 percent from a year earlier to $1.8 billion as the company shipped 14.8 million handsets, down from 28.1 million a year earlier. Motorola hasn't scored a big hit in the phone business since its original Razr earlier this decade. It's now gearing up to release several smartphones in time for the year-end holiday season and is betting heavily on Microsoft Windows Mobile and Google's Android software platform. Motorola isn't the only vendor whose phone sales are falling in the midst of the global recession -- Nokia's declined about 15 percent in the second quarter -- but the decline was steeper.

The Mobile Devices group posted a loss of $253 million for the quarter, smaller than its loss of $346 million a year earlier. The company said lower costs helped. It has announced thousands of layoffs in the division in recent months.

Motorola's Home and Networks Mobility segment, which encompasses home network devices and carrier infrastructure products, saw its sales fall 27 percent to $2.0 billion. Its earnings slipped to $153 million from $245 million. And even Enterprise Mobility Solutions, which has been a bright spot for the company, reported a 17 percent drop in sales. That segment's earnings fell to $227 million from $377 million a year earlier.

However, the company accelerated its cost-cutting efforts and now expects to save an additional $100 million this year, for total savings of $1.8 billion.

Motorola expects to roughly break even in the current quarter, with earnings from continuing operations coming in between a loss of $0.01 and a profit of $0.01, the company said Thursday.

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Stephen Lawson

IDG News Service
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