News

3 February 2009

 

Motorola’s handset revenue halves year-on-year as market share drops to 6.5%

For fourth-quarter 2008, Motorola Inc has reported revenue of $7.1bn and a net loss of $3.6bn ($1.57 per share, although this included charges of $1.56 per share). For full-year 2008, sales were $30.1bn and net loss was $1.84 per share (including charges of $1.86 per share).

Despite generating positive operating cash flow of $201m during the quarter and $242m for full-year 2008 (ending with a total cash position of $7.4bn), the board of directors has voted to suspend the declaration of quarterly cash dividends on Motorola’s common stock (believing that this will strengthen the firm’s balance sheet and enhance its financial flexibility).

Handset shipments are down by more than half from 40.9 million a year ago and 25.4 million in Q3/2008 to just to 19.2 million, while market share has fallen from 12.4% a year ago and 8.4% in Q3 to just 6.5%. Motorola has hence fallen to fifth place, after being overtaken by LG and Sony Ericsson last year. Correspondingly, the firm’s Mobile Devices segment’s fourth-quarter 2008 revenue was down 51% on $4.8bn a year ago to $2.35bn. Its operating loss has risen from $388m a year ago to $595m (including $119m of charges). For full-year 2008, revenue was $12.1bn, down 36% on 2007, and operating loss was $2.2bn (up from 2007’s $1.2bn).

“We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio,” says Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices. “In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices.” Cost-reduction actions underway company-wide are expected to generate aggregate savings of about $1.5bn in 2009 (including $1.2bn in Mobile Devices).

“We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone roadmap,” Jha adds. During fourth-quarter 2008, Motorola launched 15 new phones (including six GSM devices, one 3G device, five CDMA phones and three iDEN handsets), while the Mobile Devices is on target to launch next-generation smartphone devices in fourth-quarter 2009.

Motorola’s outlook for first-quarter 2009 is a loss of $0.10-0.12 per share (excluding charges associated with operating expense reduction initiatives).

See related items:

China handset market to grow 7.7% in 2009

Cell-phone shipments fall 10% in Q4/2008

Motorola cuts 3000 more staff in Mobile Devices

Mobile sales to show low single-digit decline in 2009

Search: Motorola Handset market

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