Weak handset sales affect Motorola profits

24 Apr 2008

Motorola reported a net loss of US$194m in its financial results for the first quarter of 2008 as well as a 39pc decline in mobile phone sales in comparison to the same quarter of 2007.

This decline in the number of handsets sold resulted in total first-quarter sales of US$7.45bn but the biggest change for Motorola this year has been the decision to split up into two separate, independently trading companies.

However, Greg Brown, president and CEO of Motorola, said improving the company’s line of mobile devices was a top priority, as evidenced by the launch of six new handsets, including the Rockr music phone and the Moto Q smart phone series.

“During the first quarter, we made an important strategic decision to separate the company, creating two independent, publicly traded entities,” said Brown.

“Our Home and Networks Mobility and Enterprise Mobility Solutions businesses continue to expand their portfolios of solutions, grow internationally and deliver solid financial results.”

However, this 39pc decrease in phone sales follows a disappointing year in 2007, which saw the company posting total revenue of US$36.6bn for the year, down from US$42.8bn in 2006. The fourth quarter of 2007 also saw an 84pc drop in net profits.

In an interview with USA Today, Brown explained neither a drop in sales nor profits were determining factors in splitting up the business. Rather, the decision was made in order to ‘unlock’ the value of the handset division.

Brown said for Motorola to succeed going forward, it must start appealing to the increasing consumer market which has emerged in recent years, and this involves “looking like Apple”.

By Marie Boran