Motorola Announces Third-Quarter Financial Results (Revenue down 15%)

SCHAUMBURG, Ill., Oct. 30 /PRNewswire/ -- - Third-quarter sales of $7.5 billion

 

 

- Positive operating cash flow of $180 million; total cash position of $7.6 billion

 

- Separation of the businesses targeted beyond 2009

 

- Implementing further cost reductions with an estimated annual savings of $800 million in 2009

 

- Mobile Devices sales of $3.1 billion; shipped 25.4 million handsets

 

- Home and Networks Mobility sales of $2.4 billion; operating earnings increased to $263 million, an increase of 65 percent compared to the third quarter of last year

 

- Enterprise Mobility Solutions sales of $2.0 billion; operating earnings increased to $403 million, an increase of 23 percent compared to the third quarter of last year

 

SCHAUMBURG, Ill., Oct. 30 /PRNewswire-FirstCall/ -- Motorola, Inc. (NYSE: MOT) today reported sales of $7.5 billion in the third quarter of 2008. The GAAP net loss from continuing operations in the third quarter of 2008 was $397 million, or a loss of $0.18 per share. This included net charges of $0.23 per share from highlighted items, which are outlined in the table at the end of this press release.

 

Greg Brown, Motorola's co-chief executive officer and CEO of Broadband Mobility Solutions, said, "The company had positive operating cash flow of $180 million and ended the quarter with a total cash* position of $7.6 billion. Our balance sheet and liquidity position give us agility and flexibility in today's weakened global economy and turbulent financial markets. In addition, we benefit from a global customer base and a broad portfolio of products and solutions that meet the needs of our customers."

 

Brown added, "In the third quarter, we continued to expand operating margins in our Home and Networks Mobility and Enterprise Mobility Solutions segments. While we will continue to prioritize investments on opportunities for growth, we are also improving our cost structure across the company by implementing further cost reductions. The initiatives announced today, together with prior actions, will result in total estimated annual savings of $800 million in 2009."

 

Sanjay Jha, Motorola's co-chief executive officer and CEO of Mobile Devices, said, "While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices. We have made progress on various elements of the separation plan and will continue to prepare for a potential transaction at the appropriate timeframe that serves the best interests of the company and its shareholders."

 

Jha added, "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."

 

Operating results

 

Mobile Devices segment sales were $3.1 billion, down 31 percent compared to the year-ago quarter. The segment reported an operating loss of $840 million, compared to an operating loss of $248 million in the year-ago quarter. The loss this quarter includes significant charges, primarily related to decisions and plans to consolidate silicon and software platforms and simplify the product portfolio.

 

Mobile Devices highlights:

 

    --  Shipped 25.4 million handsets and began shipping 16 new products to key
        markets, including three new 3G devices
    --  Launched Motorola KRAVE(TM) ZN4, which features two layers of touch - on
        an interactive clear flip outside and a full touch-screen inside
    --  Expanded our ROKR portfolio with three new music-optimized devices, the
        MOTOROKR EM30, MOTOROKR EM28 and MOTOROKR EM25
    --  Delivered several additional CDMA and companion products, including
        Motorola Rapture(TM) VU30, MOTO(TM) VU204 and MOTOPURE(TM) H15 Universal
        Bluetooth(R) Headset
    --  Announced AURA(TM), a high-tier mobile device with timeless, classic
        design

 

 

 

Home and Networks Mobility segment sales were $2.4 billion, down 1 percent compared to the year-ago quarter. Operating earnings increased to $263 million, which represents an increase of 65 percent compared to operating earnings of $159 million in the year-ago quarter.

 

Home and Networks Mobility highlights:

 

    --  Expanded operating margin year-over-year from 7 percent of sales to 11
        percent of sales
    --  Shipped 4.1 million digital entertainment devices, compared to 2.7
        million in the year-ago quarter, due to continued strong demand for HD,
        HD/DVR and IPTV devices
    --  Signed multiple contracts worth $431 million with China Mobile
        Communications Corporation for its GSM network upgrades and expansion
    --  Announced the multimedia set-top platform and its first implementation
        with KDDI, an operator in Japan
    --  Won IPTV contract with Deutsche Telekom in Germany

 

 

 

Enterprise Mobility Solutions segment sales were $2.0 billion, up 4 percent compared to the year-ago quarter. Operating earnings increased to $403 million, which represents an increase of 23 percent compared to operating earnings of $328 million in the year-ago quarter.

 

Enterprise Mobility Solutions highlights:

 

    --  Expanded operating margin year-over-year from 17 percent of sales to 20
        percent of sales
    --  Continued to realize strong international demand in the government and
        public safety markets
    --  Launched APX(TM), the industry's first Project 25 multi-band radio with
        multi-agency interoperability, dual-sided portable operation and
        integrated GPS
    --  Completed acquisition of AirDefense, a leading wireless LAN security
        provider, subsequent to the end of the quarter
    --  Signed a definitive agreement to sell the biometrics business to SAFRAN,
        subsequent to the end of the quarter

 

 

 

Fourth-quarter and full-year 2008 outlook

 

The company expects to report earnings from continuing operations in the range of $0.02 to $0.04 per share in the fourth quarter of 2008 and full-year earnings per share in the range of $0.05 to $0.07. This outlook excludes any reorganization of business charges associated with the company's operating expense reduction initiatives, as well as any other items of the variety highlighted by the company in its quarterly earnings releases.

 

 

Consolidated GAAP results

 

A comparison of results from operations is as follows:

 

 

                                                        Third Quarter
                                                               -------------
          (In  millions,  except  per  share  amounts)                      2008                2007
        ---------------------------------------------------------------------

          Net  sales                                                                              $7,480            $8,811
          Gross  margin                                                                          1,803              2,505
          Operating  loss                                                                        (452)                (10)
          Earnings  (loss)  from  continuing
            operations                                                                              (397)                  40
          Net  earnings  (loss)                                                              (397)                  60
            Diluted  earnings  (loss)  per  common  share:
                Continuing  operations                                                $(0.18)            $0.02
                Discontinued  operations                                                      -                0.01
                                                                                                          --------------------
                                                                                                          $(0.18)            $0.03
                                                                                                          --------------------
                Weighted  average  diluted  common
                shares  outstanding                                                    2,265.9          2,318.4
        ---------------------------------------------------------------------
 

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