Motorola Posts $28 Million Loss After Drop in Sales

Motorola Posts $28 Million Loss After Drop in Sales

Motorola reported a second straight quarterly loss Thursday after another quarter of subpar sales. The latest deficit, $28 million, raises pressure on the company and its chief executive, Edward J. Zander.

The company promised financial improvement in its cellphone division in the second half but steered clear of estimates after weak international sales contributed to back-to-back losses for the first time in five years.

Its hopes for recovery, put off until next year, hinge on the reception of new phones like the Razr 2 and the Z8 that are just being shipped.

Some investors are also clamoring for the board to replace Mr. Zander, whose three and a half years as chief executive have been tarnished by the company’s faltering sales strategy after two years of notable success linked to runaway sales of the Razr phone.

Thomas J. Meredith, a Motorola board member as well as chief financial officer since March, said Mr. Zander still had backing from directors.

“The board is of the opinion that we have the right strategy and we have the right leadership team,” he said.

Motorola, based in Schaumburg, Ill., is in the midst of its worst stretch since a string of six straight quarters in the red from 2000 to 2002. Analysts say it is likely that Motorola has slipped beneath Samsung Electronics to third place behind Nokia in the global handset market.

Second-quarter results brought a handful of bright spots but mostly bad numbers for Motorola, which had warned last week that its results would fall short of expectations.

Few of the numbers were as indicative of its deterioration and cutbacks as the total of 35.5 million handsets it shipped during the quarter — down 46 percent from the fourth quarter when the cellphone business was still near its peak.

The net loss amounted to a penny a share, in contrast with a profit of $1.38 billion, or 55 cents a share, in the period a year ago.

Revenue fell 19 percent, to $8.73 billion, from $10.82 billion.

Mr. Zander acknowledged that “there weren’t many really new ‘wow’ products” in Motorola’s portfolio in the first half of 2007.

“This has certainly been a very difficult year,” he told analysts on a conference call.

He said several areas of improvement in the quarter provide the basis for a second-half financial pickup: a decline in inventory channels and gross margins, a higher average selling price, a lower cost structure and the recent flurry of new products.

Motorola shares rose 22 cents, to $18.22.

source : nytimes.com