Motorola's Financial Results Show Handset Woes Continue

The earnings report, which also included a gloomy prediction for second quarter sales, was issued just days before the company's annual stockholders meeting.



Motorola's mobile handset business is going from bad to worse as the company, in its first quarter financial report announced Thursday, cited a 40% plunge in handset deliveries to 27.4 million units.

The report, which also included a gloomy prediction for second quarter sales, was issued just days before the company's annual stockholders meeting. Motorola has already said it plans to split the company in two and spin off the Mobile Devices operation.

The second group, Motorola's Networks Mobility and Enterprise Mobility Solutions businesses, are performing well, growing "internationally and deliver[ing] solid financial results," according to a statement from Greg Brown, Motorola's president and chief executive officer.

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

Motorola said Mobile Devices losses were $418 million on sales of $3.3 billion, down 39% from the year-earlier quarter. Motorola, which dominated the handset market years ago, has dropped to a fourth place market share behind Nokia, Samsung, and LG Electronics. Most potential acquirers of the Mobile Devices unit have already said they aren't interested in acquiring the operation.

Brown, who took over the helm of Motorola from Ed Zander in November, has said a standalone handset unit will be better positioned to recover. The company's last big hit in the handset market was the Razr, which was unveiled in 2004.

In its financial report, Motorola said its Home and Networks Mobility segment recorded slightly improved sales of $2.4 billion in the quarter; operating earnings were $153 million, down slightly from the $167 million logged in the year-earlier period.

Enterprise Mobility Solutions reported a 5% increase in sales of $1.8 billion with increased operating earnings of $250 million against $131 million in the year-ago quarter.

Billionaire financier Carl Icahn recently dropped his proxy fight with Motorola after the company agreed to seat two of Icahn's representatives on the company board and after Motorola said it would divide the company into two operations.

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