Motorola Posts Narrower Loss Than Analysts Predicted (Update1)
By Hugo Miller
July 30 (Bloomberg) -- Motorola Inc., the biggest U.S. mobile-phone maker, posted a narrower second-quarter loss than analysts projected after job cuts reduced costs and handset sales recovered.
The loss, excluding some costs, was 1 cent a share, Schaumburg, Illinois-based Motorola said today in a statement. That beat the average estimate of 4 cents by analysts in a Bloomberg survey. Revenue fell 32 percent to $8.08 billion.
Motorola plans to introduce phones based on Google Inc.’s Android software for the year-end holiday season to reverse a sales decline and compete with Apple Inc. and Research In Motion Ltd. Motorola has cut at least 7,000 jobs since October as it narrows its phone range. The company is now realizing those savings, said Matt Thornton, an analyst at Avian Securities LLC in Boston.
“Motorola is probably ahead of pace in terms of cost cutting,” Thornton, who has a “neutral” rating on the stock, said in an interview before the report. “Progress in their mobile devices business at this point is going to be driven by cost cuts.”
The net income rose to $26 million, or 1 cent a share, from $4 million, or break-even on a per-share basis, a year earlier. Handset shipments were 14.8 million. Goldman Sachs Group Inc. analyst Simona Jankowski estimated shipments of 14.3 million and Citigroup Inc.’s Jim Suva predicted 14.6 million.
Motorola declined 25 cents to $6.57 yesterday in New York Stock Exchange composite trading. Before today, the stock had advanced 48 percent this year.
IPhone, BlackBerry Gains
Earnings this quarter, excluding some costs, will be as high as 1 cent a share, Motorola predicted. Analysts projected a loss of 1 cent.
Motorola’s sales have dropped by almost half in three years because it failed to come up with a phone to repeat the success of the Razr, the best-selling device introduced in 2004. Last month, Verizon Wireless started offering Motorola’s Rival, which has a music player and a slide-out keyboard, and AT&T Inc. began selling the company’s Karma Internet phone.
Motorola said in February it doesn’t expect to restore profitability this year. To reduce more costs, Co-Chief Executive Officers Greg Brown and Sanjay Jha announced plans in January to eliminate 4,000 jobs.
Apple posted earnings this month that exceeded analysts’ estimates after shipments of its iPhone soared sevenfold in the latest quarter to 5.2 million. RIM said last month quarterly BlackBerry shipments rose about 44 percent to 7.8 million.
Motorola’s task of developing a hit Android phone is difficult because other handset makers also use the software, Thornton said. Google, based in Mountain View, California, said last month it expects at least 18 Android phones to be introduced by the end of the year. HTC Corp. already sells an Android phone and Acer Inc., Samsung Electronics Co. and Asustek Computer Inc. have announced similar plans.
“Motorola made the right choice and the only choice with Android,” said Thornton. “It remains to be seen how Motorola will differentiate itself from its competitors.”
To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net
Last Updated: July 30, 2009 07:11 EDT
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