RealMoney Silver - Motorola Mangles Another Quarter

Motorola Mangles Another Quarter
By Scott Moritz
Senior Writer
7/11/2007 5:30 PM EDT

Motorola (MOT) sank late Wednesday after the struggling handset maker warned of yet another sales shortfall and named a new handset chief.

The company, which has been trying to mount a turnaround ever since its once-hot Razr phone lost its fashion edge late last year, cited "lower overall unit volumes in the Mobile Devices business in Asia and Europe." Motorola said it no longer expects the handset unit to make money for the year.

The company named Stu Reed, executive vice president of its Integrated Supply Chain organization, president of the handset business, effective immediately. Reed will report to operating chief Greg Brown.

Motorola shares had rallied late in Wednesday's regular trading session on a rumor that CEO Ed Zander would be ousted. Motorola declined to comment on that rumor. Zander wasn't mentioned in either of the company's postclose press releases Wednesday.

Zander managed to prevail in a proxy battle earlier this year with shareholder activist Carl Icahn, but the executive continues to take heat for the abysmal performance of the company's mobile phone unit.

By April, the company had posted a full year's worth of disappointing numbers, and astonishingly, the handset unit plunged into red ink. Motorola has since given back crucial ground in the mobile phone business to rivals Nokia (NOK) and Apple (AAPL) .

In response, the stumbling wireless tech titan has reshuffled its executive ranks this year, replacing its CFO and naming an operations chief to help with the restructuring effort. The company has set plans to cut 7,500 jobs in two rounds.

The Schaumburg, Ill., wireless company said it expects to lose 2 cents to 4 cents a share for the second quarter on sales of $8.6 billion to $8.7 billion. Analysts were looking for a 2-cent profit on sales of $9.26 billion.

Motorola had said earlier this year that it expected sales to be flat with first-quarter levels at around $9.4 billion.

The company expects second-quarter shipments to be 35 million to 36 million handsets.

After rising 33 cents in regular trading Wednesday, Motorola dropped 35 cents in postclose action to $17.60.