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Huge fourth-quarter loss for Motorola
Posted: 04 February 2009 0114 hrs


NEW YORK: Motorola reported a huge fourth-quarter loss on Tuesday and said it was suspending its dividend and looking for a new chief financial officer.

The Illinois-based company reported a net loss of 3.57 billion dollars in the final three months of 2008, or 1.57 dollars per share, and a net loss of 4.16 billion dollars for the full year.

Motorola also released a grim outlook for the current quarter, forecasting a loss of 10 to 12 cents per share.

The company suspended its quarterly cash dividend and said it was looking for a replacement for chief financial officer Paul Liska. Senior vice president and corporate controller Edward Fitzpatrick was named acting CFO.

Motorola's stock plunged on Wall Street losing 11.01 percent on the day to close at 4.04 dollars.

Moody's Investors Service announced it was downgrading Motorola's debt rating by a notch to its lowest investment grade, "baa3."

Writing on 247wallst.com, analyst Douglas McIntyre said: "Motorola really can't make a comeback in handsets," adding the company has "gone beyond the point of no return."

Motorola said sales of mobile devices plunged 51 percent in the fourth quarter compared with the same quarter a year ago to 2.35 billion dollars.

The mobile devices unit reported an operating loss of 595 million dollars for the quarter, including 119 million dollars of highlighted items, compared with an operating loss of 388 million dollars in the year-ago quarter.

Motorola said it shipped 19.2 million handsets in the quarter and that its share of the global handset market was an estimated 6.5 percent.

For the full year, mobile sales were 12.1 billion dollars, 36 percent lower than in 2007, with an operating loss of 2.2 billion dollars, compared with an operating loss of 1.2 billion dollars in 2007.

Motorola said it plans to carry out cost-reductions of some 1.5 billion dollars in 2009.

"In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices," Motorola's co-chief executive officers Greg Brown and Sanjay Jha said in a statement.

"The cost-reduction actions underway are expected to generate aggregate savings of approximately 1.5 billion dollars in 2009," they added.

They said that in the fourth quarter: "We generated positive operating cash flow of 201 million dollars and ended the year with total cash of 7.4 billion dollars."

Motorola said it planned to launch next-generation devices during the fourth quarter of 2009.

"We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone roadmap," said Jha, who took over as CEO of the Mobile Devices unit in August.

"We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio," he added.

Motorola announced last month it was slashing 4,000 jobs in addition to 3,000 job cuts announced in October.

Motorola enjoyed success with its popular Razr phone launched in 2005 but has been losing ground since to Apple and Research in Motion as well as other major cell phone makers such as Nokia, Samsung and Sony Ericsson. - AFP/de