Thursday, mobile equipment maker Motorola Inc. (MOT) reported a loss for the third quarter compared to a profit last year, hurt by one-time items and weak sales, as the Mobile Devices segment witnessed a 31% decline in sales. Motorola also said that the spin-off of the Mobile Devices division will be delayed due to the current macro-economic environment. Further, the company provided earnings outlook for the fourth quarter and fiscal 2008.
The company's net loss for the quarter was $397 million, or $0.18 per share, compared with a net profit of $60 million, or $0.01 per share, last year. Latest third quarter included net charges of $0.23 per share from certain items. Analysts expected earnings of $0.02 per share for the quarter.
Motorola reported quarterly sales of $7.48 billion, down from $8.81 billion last year. Analysts were looking for sales of $7.82 billion.
For the sequentially preceding quarter, Motorola reported a net income of $4 million, or $0.00 per share, on net sales of $8.08 billion.
Business segment wise, Mobile Devices segment posted sales of $3.12 billion, down 31% from $4.496 billion in the year-ago quarter. The segment also reported an operating loss of $840 million, compared with an operating loss of $248 million last year. The company attributed the loss to significant charges, primarily related to decisions and plans to consolidate silicon and software platforms and simplify the product portfolio. During the quarter, the Mobile Devices segment shipped 25.4 million handsets.
Home and Networks Mobility segment recorded a 1% decline in sales to $2.37 billion. However, operating earnings were up by 65% from last year to $263 million.
Enterprise Mobility Solutions reported quarterly sales of $2.03 billion, up 4% from $1.95 billion in the year-ago quarter. Operating earnings increased 23% year-over-year to $403 million.
Earlier this year, the company had announced the initiation of a process to create two independent, publicly-traded companies, by splitting off its Mobile Devices business. According to Sanjay Jha, Motorola's co-chief executive officer and chief executive officer of Mobile Devices, while the company's intent remains intact, it no longer targets to complete the transaction in the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices. The separation of the businesses is now targeted beyond 2009.
"As part of our plan to rebuild Mobile Devices, we have announced significant actions to accelerate the consolidation of our product platforms and refocus our investment and market priorities. These efforts will result in a leaner organization with a more competitive and cost-effective product portfolio," Jha added.
Among others in the sector, mobile devices giant Nokia Corp. (NOK) on October 16 reported a sharp decline in third-quarter profit, impacted by lower net sales across its businesses, despite a 5% rise in mobile device volumes.
Another rival, LM Ericsson Telephone Co. (ERIC) on October 20 reported a 30% drop in its third-quarter profit, largely due to a restructuring charge. The company's net sales were higher than last year.
For the nine-month period, Motorola reported a net loss of $587 million, or $0.26 per share, compared with a net loss of $149 million, or $0.06 per share, in the previous year. Net sales declined to $23.01 billion from $26.98 billion in the same period last year.
Going forward, Motorola expects fourth-quarter earnings from continuing operations in a range of $0.02 - $0.04 per share. The company also sees full-year earnings per share from continuing operations between $0.05 and $0.07.
The forecast excludes any reorganization of business charges associated with the company's operating expense reduction initiatives, as well as any other items. Analysts expect earnings of $0.07 per share for the fourth quarter and $0.06 per share for fiscal 2008.
MOT is trading at $5.17, down $0.28, on a volume of 6.42 million shares.
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