Moto continues hemorrhaging while it regroups

Motorola Inc. continued to lose traction in the handset market as first-quarter revenue was down nearly 40%, its operating losses nearly doubled and handset shipments were down drastically over the year-ago quarter.
Wall Street hammered the company’s stock, sending it down nearly 5% today to hover around $9.12 per share, near its 52-week low.
Motorola said today it shipped 27.4 million handsets in the first quarter, down sharply from 45.4 million in the year-ago quarter and 41 million in the fourth quarter.
The dismal showing leaves the company increasingly vulnerable in a period of upheaval among incumbent handset makers. Motorola’s annual shareholders meeting is less than two weeks away and it remains unclear when it might appoint a new leader for its handset division, which it has said may be spun off into a separate, publicly traded company.
LG biting at heels
One metric of vulnerability: Motorola is barely ahead of LG Electronics Co. Ltd.’s performance on handset shipments for the quarter. Korea’s LG shipped 24.4 million handsets in the quarter. Last year, Motorola, formerly the clear No. 2 handset maker behind Nokia Corp., was surpassed by Samsung Electronics Co. Ltd. Samsung reports earnings tomorrow.
Now the Schaumburg, Ill.-based handset maker is No. 3 and still slipping.
CEO Greg Brown referenced an “embryonic portfolio” — hardly a reassuring term, as the company’s stock drop reflected — in a conference call with analysts today. Brown also acknowledged that the company’s global market share was nearly 10%, down from nearly 18% in the year-ago quarter. At the height of the company’s success with its Razr handset, it had achieved nearly 22% global share.
According to analyst Tero Kuittinen, a columnist for RealMoney.com, Motorola, Sony Ericsson Mobile Communications and Apple Inc. all saw more than seasonal plunges in device shipments between the typically hot fourth quarter and the typically tepid first quarter — all for different reasons. For Motorola, the analyst said that the extreme dip in handset volumes was “a minor surprise.”
“The volume tumble … signals that no sign of stabilization are emerging,” Kuittinen wrote today.
“Taken together, (Motorola, Sony Ericsson and Apple’s results) may also reflect how hostile the upgrade cycle is turning, particularly in Europe,” according to the analyst.
The numbers
Motorola’s mobile devices division — its former bread-and-butter and now its loss leader — earned sales of $3.3 billion, down 39% from the year-ago quarter. The company posted an operating loss of $418 million, compared with a loss of $233 million in the year-ago quarter.
The plunge in the company’s handset fortunes has made Moto’s other divisions appear more robust.
The home and networks mobility division’s sales reached $2.4 billion, up 2% over the year-ago quarter. Operating earnings, however, were down to $153 million from $167 million in the year-ago quarter.
Enterprise mobility solutions sales reached $1.8 billion, up 5% over the year-ago quarter. Operating earnings in that business reached $250 million, up nearly 100% from the year-ago quarter. The company attributed its enterprise mobility success to strong international demand for its products.
The company’s overall net loss was pegged at $194 million, or 9 cents per share for continuing operations.
Motorola projected a continuing loss in the second quarter of 2 cents to 4 cents per share.