Motorola posts first quarterly loss since 2004, weak sales to blame

19 Apr 2007

Motorola yesterday posted its first quarterly loss since 2004 as weak sales continued to blight the struggling manufacturer. The firm posted a loss of USD181 million in the three months to 31 March 2007, compared with a profit of USD686 million in Q12006, on the back of disappointing sales and expenses relating to a legal settlement, restructuring costs and an acquisition. Motorola went on to predict that the poor trading situation could continue well into the second quarter and its grim prognosis comes just a month after a warning that the world’s second largest cell phone maker would fall USD1 billion short of previous projections.

Sales in the first quarter dipped by 1.8% year-on-year, from USD9.61 billion to USD9.43 billion, albeit ahead of Wall Street analysts’ forecasts of USD9.29 billion. However, Motorola said sales of mobile devices – its single biggest revenue generator – slumped a worrying 15% to USD5.4 billion. ‘The performance at our mobile device business in the first quarter was unacceptable, and we are committed to restoring it to profitability and positive cash flow,’ said Chairman and Chief Executive Ed Zander during a conference call with investors. The company remains upbeat about its prospects for making money in 2007, but analysts are disappointed with the company’s negative outlook. Motorola said it sold 45.5 million handsets and had worldwide market share of about 17.5%, down from a high of 22% last year.

United States, Motorola