Skip to main content

Motorola Slumps After Quarterly Loss

Shares are falling 4% in early trading.

Shares of



fell 4% Thursday after the wireless giant gave weaker-than-expected guidance amid continued troubles in its mobile-phone unit.

The struggling Schaumburg, Ill., handset maker posted a loss of $194 million, or 9 cents a share, in the first quarter, widening from a loss of $181 million, or 8 cents a share, in the year-ago period. The latest quarter included 4 cents of charges, primarily for costs to cut jobs. Analysts expected a loss of 7 cents a share in the quarter.

Sales for the first quarter were $7.45 billion, plunging 21% from $9.43 billion a year earlier and below the $7.75 billion Wall Street was expecting.

Motorola said mobile-device sales in the quarter were $3.3 billion, down 39% from last year. The division had an operating loss of $418 million in the quarter, nearly doubling the loss in the year-ago quarter. That weakness was offset by a strong performance in the company's other segments, which helped shrink Motorola's overall operating loss to $269 million from $366 million last year.

"We didn't expect much and we didn't get much," says Mark McKechnie, an analyst with American Technology Research. "The handsets were worse than expected, but that's not a surprise given where their handset lineup is."

Looking ahead, Motorola expects to book a loss in a range of 2 cents to 4 cents a share, before items, in the second quarter. The Thomson Financial average estimate is for a loss of a penny per share.

Motorola is currently working to split its operations into two separate publicly traded companies. On March 26, the company announced it would seek to splinter off its troubled handset unit. The remainder of the company will consist of a cable set-top box operation, a wireless networking infrastructure business and a security and government services venture.

"During the first quarter, we made an important strategic decision to separate the company, creating two independent, publicly traded entities," CEO Greg Brown said in a press release. "Improving the product portfolio in Mobile Devices and positioning both businesses for future success remains a top priority."

The company's woes, which began two years ago with the Razr's fall from fashion, are becoming even more dire given the backdrop of a slowing economy and cooling growth in mobile-phone sales.

Shares of Motorola recently were down 39 cents, or 4.1%, to $9.16. Competing phone maker


(NOK) - Get Nokia Corporation Sponsored American Depositary Shares Report

was losing 2.1%, while

Scroll to Continue

TheStreet Recommends


(ERIC) - Get Ericsson Report

tacked on 0.2%. Wireless technology firm


(QCOM) - Get QUALCOMM Incorporated Report


which posted earnings

late Wednesday, slipped 1.4%.

Among smartphone makers,



was unchanged,

Research In Motion


eased 0.1%, and


(AAPL) - Get Apple Inc. Report

, which also

posted quarterly results

after the prior close, was rising 1.2%.