Motorola Has Smaller Loss Than Analysts Estimated (Update2)
By Hugo Miller
April 30 (Bloomberg) -- Motorola Inc., the biggest U.S. mobile-phone maker, reported a smaller first-quarter loss than analysts projected as job reductions helped offset slumping handset sales.
The loss, excluding severance and other costs, was 8 cents, compared with the average analyst estimate of 10 cents in a Bloomberg survey. Sales fell 28 percent to $5.37 billion, the Schaumburg, Illinois-based company said today in a statement.
Motorola has cut at least 7,000 jobs since October as the recession forces consumers and companies to curb handset purchases, and Apple Inc. and Research In Motion Ltd. win over customers. The company boosted its cost-savings target for this year by $200 million to $1.7 billion as it strives to return to profitability.
“The evidence of cost-cutting was impressive,” said Tavis McCourt, an analyst at Morgan Keegan & Co. in Nashville, Tennessee, with a “market perform” rating on the stock. “They may be profitable in the third quarter.”
The loss this quarter, excluding some items, will be 3 cents to 5 cents a share, Motorola predicted. Analysts projected a loss on that basis of 4 cents.
Motorola rose 24 cents, or 4 percent, to $6.20 in trading before U.S. exchanges opened, after closing at $5.96 yesterday on the New York Stock Exchange. The stock had advanced 35 percent this year before today.
Shipment Slump
The net loss widened to $231 million, or 13 cents a share, from $194 million, or 9 cents, a year earlier. Sales fell for a ninth straight quarter and missed the average analyst estimate of $5.62 billion.
“Sales were a little bit weaker than I expected but not disastrous,” McCourt said. “They’re clearly doing what it takes to get back to profitability.”
Motorola, which said in February that it doesn’t expect to restore profitability this year, posted a 45 percent drop in mobile-phone revenue to $1.8 billion as it narrowed its range of devices. Phone shipments almost halved to 14.7 million handsets. That beat the 14 million estimate of Simona Jankowski, an analyst at Goldman Sachs Group Inc. in San Francisco.
Motorola is betting on a new Web and e-mail phone based on Google Inc.’s Android software, scheduled to be released in time for the year-end holidays. Motorola’s share of the handset market won’t improve until the Android phone makes it debut, Jankowski said.
HTC, Samsung Competition
HTC Corp. already makes an Android phone and Taipei-based Acer Inc. said this month it expects to release a device based on the Google software by the end of the year. Samsung Electronics Co., which eclipsed Motorola as the top seller of phones in the U.S. last year, is introducing an Android phone in June.
Motorola is trying to mimic the success of Apple’s iPhone and RIM’s BlackBerry, which appeal to consumers who want phones with Web browsers and media players. Carriers such as AT&T Inc. and Verizon Wireless favor such devices because their users of such phones usually spend more.
Sales growth of smart phones equipped with Web, e-mail and video functions will climb 3.4 percent this year as the overall mobile phone market shrinks for the first time since 2001, according to Framingham, Massachusetts-based research firm IDC.
To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net
Last Updated: April 30, 2009 07:54 EDT |
