Falling phone sales hit Motorola Q4 results

Falling cell-phone sales hurt ailing Motorola's results for the fourth quarter and its forecast for the current period.

Motorola's mobile-phone business continued to lose its signal in the fourth quarter, dragging the company's revenue and profit down.

The Schaumburg, Illinois, company has had trouble coming up with a phone to match the success of its original Razr, which is now several years old and does little for the company's bottom line. Motorola's Mobile Devices unit had sales of US$4.8 billion in the fourth quarter, down from $7.8 billion a year earlier, and the division lost $388 million compared with profit of $341 million in last year's fourth quarter.

Stronger results with enterprise and home-network products eased Motorola's pain, but the company still reported a steep fall in profit for the quarter and a loss for the full year 2007. In the fourth quarter, Motorola had net income of $100 million and earnings per share of $0.04, down from $529 million or $0.25 a year earlier. The company lost $49 million or $0.02 per share for the year. Companywide, revenue in the quarter fell to $9.6 billion from $11.8 billion a year earlier.

The outlook for the current quarter is no better. Along with Wednesday's earnings report, Motorola forecast a loss of between $0.05 per share and $0.07 per share, excluding charges associated with its cost-reduction initiatives and other items.

"The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done," CEO Greg Brown said in a prepared statement. The company's "primary focus" is to improve profits and enhance its mobile products, he added. Motorola is also focused on reducing costs and took several steps to make the Mobile Devices business more efficient, he said.

Once locked in a struggle with Nokia for cell-phone sales leadership, Motorola had fallen to third place behind Samsung by last year's third quarter. Last May, when it introduced the Razr's successor, called the Razr2, the company said it hoped the new device would cut losses. But tough times have continued in the face of Apple's iPhone and other high-profile competitors, and in late November, CEO Ed Zander was replaced by Brown.

Fourth-quarter sales were up in both the Home and Networks Mobility group, which makes set-top boxes and wireless infrastructure, and in Enterprise Mobility, which benefitted from Motorola's acquisition of Symbol Technologies early last year. The home business saw sales rise 11 percent to $2.7 billion, though its profit fell to $192 million. Profit in the home business soared to $451 million from $323 million in the fourth quarter of 2006, while sales were up 35 percent to $2.1 billion.

In midday trading Wednesday, Motorola's shares on the New York Stock Exchange were down $2.32 to $10.00 amid a generally weak day on Wall Street.

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Stephen Lawson

IDG News Service
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