Motorola reports loss for second straight quarter

Motorola on Wednesday announced its second loss in as many quarters, citing ongoing difficulties in the telecommunications and semiconductor markets.

The company reported revenue of US$7.5 billion for the period, which ended June 30, a decrease of 19 percent from a year ago, the company said in a statement. Including pro-forma adjustments, Motorola posted a loss of $232 million, or $0.11 per share, compared with earnings of $551 million, or $0.25 per share, in the year-ago period.

The company inched past the expectations of financial analysts, who had expected it to report a loss of $0.12 per share, according to a consensus estimate gathered by Thomson Financial/First Call.

Excluding the pro forma adjustments, including a pretax charge of $496 million, or $0.24 per share after tax related to cost reduction measures, Motorola actually incurred a loss for the quarter of $759 million or $0.35 per share, the company said.

Motorola said sales decreased in all of its major product segments except for broadband communications. In its largest business, Personal Communications, sales were down 25 percent from a year ago, and the division reported an operating loss of $237 million, compared to a profit of $136 million a year earlier. Sales of mobile phones were down in the U.S., Europe and Asia, the company said.

Motorola also took a hit in its Semiconductor Products segment, where sales decreased 38 percent. The unit reported an operating loss of $381 million, down from a profit of $176 million a year earlier. The company cited a "very substantial downturn" across the semiconductor industry.

Chip sales were hurt most in Europe and the Americas, but were also weak in Asia Pacific. Embedded processors were affected the most, followed by components used in wireless and networking equipment, the company said.

Adding to its woes, Motorola has yet to receive payment for a $2 billion loan it made to Turkish mobile network operator Telsim Mobil Telekomuniksyon Hizmetleri AS, Motorola said. At the end of April, $728 million became due and was not repaid. In June, Motorola accelerated the schedule for repayments and is considering legal action to recover its money, it said.

When Motorola announced its first quarter earnings in April, the company reported its first operating loss in 15 years, blaming a worldwide slowdown in the technology industry.

The second quarter has been no kinder to the telecommunications industry. Last month, Finland's Nokia issued a profit warning, lowering its estimated year-on-year growth from 20 percent to 10 percent. Although Sweden's Ericsson has not issued a warning for the quarter, it closed last quarter by saying it would cut up to 12,000 jobs, and said it expects to report a loss in the second quarter.

Motorola last month exited the Mexican cellular market, completing the sale of its Baja Cellular, Movitel, Norcel, and Cedetel divisions to Spain's Telefonica SA for $1.8 billion in stock.

Prior to the earnings announcement, Motorola's shares on the New York Stock Exchange closed up 1 percent, at $15.67.

Join the newsletter!

Error: Please check your email address.

More about Ericsson AustraliaFirst CallMotorolaNokiaTelefonicaThomson Financial

Show Comments