Motorola posted a $3.6 billion net loss in the fourth quarter of 2008, mainly related to non-cash charges for goodwill write-downs and an increase in a deferred tax reserve, as the company’s beleaguered handset division reported a sharp drop in sales and continued to falter.
Home and Networks Mobility segment sales, which include digital-cable set-tops and related video equipment, were $2.6 billion compared with $2.7 billion in the year-ago quarter. Operating earnings for the unit increased to $257 million, compared with operating earnings of $192 million in the year-ago quarter.
In the cable-focused Home business, fourth-quarter sales were approximately $1.2 billion, up 11% year-over-year, with Motorola shipping 4.7 million digital-entertainment devices in the quarter, compared with 3.4 million in the year-ago quarter, on strong demand for HD, HD DVR and IPTV set-tops.
“Something is going on â€” the guidance is much worse than expected, which seems to imply that actions they’re taking are not enough in the short term,” said analyst Pablo Perez-Fernandez at Global Crown Capital. Motorola’s mobile devices division continued its slump, with sales of $2.35 billion, down 51 percent compared with the year-ago quarter. The company shipped 19.2 million handsets in the quarter, down 53 percent from the 40.9 million in the fourth quarter of 2007. The division had an operating loss of $595 million, compared to an operating loss of $388 million in the year-ago quarter. The division had a 6.5 percent global market share and its average selling price in the quarter was $123, relatively flat from the year-ago period.
Motorola announced in mid-January that it would be cutting 4,000 jobs, 3,000 of which would come from the mobile devices division. This follows the 3,000 job cuts that were announced last fall. The company said Tuesday that these cuts would save $1.5 billion in 2009, including $1.2 billion for the handset division.
Motorola also announced Tuesday that Ed Fitzpatrick, senior vice president and corporate controller, has been named acting chief financial officer effective immediately, replacing former CFO Paul Liska.
Fitzpatrick previously was corporate vice president of finance for the cable-focused Home & Networks Mobility business and has been controller for the company’s Networks & Enterprise and the Government & Enterprise Mobility Solutions businesses. Before joining Motorola, he was a senior manager at Price Waterhouse.
Adding further, Co-CEO Sanjay Jha, the head of the mobile devices division, reaffirmed the company’s commitment to developing and launching phones based on Google’s Android platform. Jha said the phones would be differentiated by their integrated social networking capabilities.
He said Motorola’s experience working with Linux Java modules in the past would give it a leg up on competitors, even if they got their Android-based phones to market before Motorola. Jha also said Motorola remained committed to Windows Mobile, refuting rumors that it was not supporting the OS, and said Motorola would continue supporting the platform into 2010, as Windows 7 launched.