Motorola cuts cash payout as losses widen

3 Feb 2009

Motorola has suspended cash dividend payouts to its shareholders today as losses at one of the world’s major mobile phone makers reached US$3.6bn. The company has predicted weak sales in Q1.

Motorola today reported sales of US$7.1bn for the fourth quarter and full-year revenues of US$30.1bn.

Despite the struggling revenues, Motorola insists its still cash positive with operating cash flow of US$282m and some US$7.4bn in the bank.

However, the board of directors at Motorola have voted to suspend the declaration of quarterly cash dividends on the company’s common stock, effective immediately. The board believes suspending the dividend will further strengthen Motorola’s balance sheet and enhance its financial flexibility.

Motorola’s president and co-CEO and CEO of Broadband Mobility Solutions, Greg Browne, and Sanjay Jha, co-chief executive officer and CEO of Mobile Devices, jointly stated: “In the fourth quarter, we generated positive operating cash flow of US$201m and ended the year with total cash of US$7.4bn.

“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. The cost-reduction actions underway are expected to generate aggregate savings of approximately US$1.5 bn in 2009,” added Brown and Jha.

Mobile devices segment sales were US$2.35bn, down 51pc compared with the year-ago quarter. The operating loss was US$595m, including US$119m of highlighted items, compared to an operating loss of US$388m in the year-ago quarter.

For the full year 2008, sales were US$12.1bn, a 36pc decrease compared to 2007, and the segment incurred an operating loss of US$2.2bn, compared to an operating loss of US$1.2bn in 2007.

During the quarter, the company shipped 19.2 million handsets and estimates its share of the global handset market was 6.5pc.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years