Motorola Q1 Sales Fall, Cuts Losses - Twice

Motorola Q1 Sales Fall, Cuts Losses

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Schaumburg, Ill. — Motorola’s revenues shrank in the first quarter on a year-over-year and sequential basis, but the company lost markedly less money on a sequential basis, the company said.

The operating-loss improvements are the result of cost-reduction strategies that will reduce the company’s overall expenses by $1.7 billion for the full fiscal year.

Motorola’s first-quarter revenues dropped 28 percent year over year to $5.37 billion, largely due to a 45 percent decline in wireless handset sales to $1.8 billion. Company-wide first-quarter operating losses grew 67 percent to $449 million compared to the year-ago period. On a sequential basis, however, the company’s operating losses shrank 73 percent from the fourth quarter’s $1.68 billion despite a sequential sales decline of 25 percent.

Unit sales of handsets, which accounted for 33.5 percent of company revenues in the first quarter, fell to 14.7 million from a year-ago 27.4 million and from the fourth quarter’s 19.2 million. Motorola estimated its worldwide handset unit share at 6 percent in the first quarter, down from the year-ago 9.4 percent and down from the fourth quarter’s 6.5 percent. Motorola’s second-quarter handset sales will be “comparable to slightly down” from the first quarter, said co-CEO Sanjay Jha. Sequentially, handset dollar volume fell from $2.35 billion to the first-quarter’s $1.8 billion.

The handset segment’s operating losses were down sequentially to $381 million from the fourth quarter’s $471 million, “primarily due to reductions of 40 percent year-over-year and 25 percent sequentially in operating expenses,” said Jha. For the second quarter, he projected a “meaningful sequential reduction in operating losses” and for the full year, “a significantly lower operating loss.”

Revenues in the company’s home and networks mobility segment fell in the first quarter by 16 percent to $1.99 billion, and revenues in the enterprise mobility segment fell 11 percent to $1.6 billion, but both segments posted operating earnings of $115 million and $156 million, respectively, even though those earnings were down 25 percent and 38 percent, respectively.

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