If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Motorola continues to struggle as they posted a first-quarter continuing operations loss of $194 million, or 9 cents a share, compared with a year-ago loss of $218 million. Excluding costs tied to recent job cuts, Motorola lost 5 cents a share, 2 cents better than the Wall Street analyst estimate.
But if the company’s bottom-line performance was slightly better than expected, the rest of its report wasn’t terribly upbeat. Motorola posted sales of $7.45 billion, down 21% from a year ago. Sales in the hard-hit handset unit slumped 39% from a year ago, as Motorola sold 27 million handsets for the quarter.
The drastic decline at that operation prompted Motorola to agree earlier this year to split off its handset and broadband businesses in a new company, as well as to give some board seats to dissident investor Carl Icahn, who has been criticizing Motorola for more than a year and who has called repeatedly for a splitup.
Motorola is also bleeding cash, posting an operating cash outflow of $343 million in the first quarter. The company said it expects to lose 2 to 4 cents a share for the second quarter, excluding costs related to job cuts.
Analysts were looking for a penny-a-share loss. Shares of Motorola, which have lost more than half their value over the past year during the handset unit’s implosion, dropped 35 cents in early trading Thursday to $9.20.
Gone were the days of the 80s when Motorola controlled the lion share in the mobile phone industry. They are trailing leaders like Nokia and Sony Ericsson and their recent success, Razr, is long since displaced as favorites by newer and hipper models.
The sad news this week is about Motorola jettisoning their mobile phone business. The announcement pushed the stock to a four-year low. That play was followed by a forfeit - a glaring absence of new phones at the wireless industry’s event going on now in Las Vegas. An unsolicited, and so far unacknowledged offer for the phone unit came from Videocon, a big consumer electronics company in India.
The news that the suitor wasn’t exactly Nokia or Sony Ericsson or even China’s ZTE brought home a message that many Motorola watchers have already come to uncomfortable terms with: The once proud phone giant has fallen to bargain basement levels.
Some observers have even gotten to an actual estimated dollar value for the money-losing phone business, if Motorola were to spin it off. The remaining businesses, like set-top TV boxes, wireless infrastructure and the walkie-talkie operations, would trade for about $8 a share. At the time, Motorola’ stock price was hovering around $9, meaning the phone business was worth roughly $1 a share.
At these prices, it’s probably not terribly surprising that some far-flung potential bidders have taken an interest in the No. 3 phone maker. There are suspicions that such a split is to benefit shareholders rather than to help the company. Will it be effective for Motorola in the long run? We will have a better idea when Motorola releases their next financial report.
