Motorola posts big loss, plans to cut 3,000 jobs

ByABC News
November 1, 2008, 5:01 PM

NEW YORK -- Motorola posted a hefty loss in the third quarter Thursday, citing the continued troubles of its cellphone division. The company will postpone the planned spinoff of the unit, and cut more jobs.

The maker of communications gear said it would get rid of 3,000 jobs by April, with about 2,000 of them coming from the cellphone unit. The company last announced 2,600 job cuts in April.

Motorola lost $397 million, or 18 cents per share, in the July-September period. It had earned $60 million, or 3 cents per share, in the same period a year ago.

Sales fell 15% to $7.48 billion.

The loss included 23 cents of charges, mostly for restructuring costs. Without the charges, Motorola would have earned 5 cents a share, reflecting unexpectedly strong results in its non-cellphone operations. Analysts polled by Thomson Reuters had on average expected the company to earn 2 cents per share on revenue of $7.82 billion.

For the fourth quarter, Motorola said it expects to earn 2 cents to 4 cents per share. Analysts polled by Thomson Reuters had expected the company to earn 7 cents per share in the quarter, excluding items.

Shares of Motorola fell 31 cents, or 5.7%, to $5.15 in afternoon trading, even as the broader market rallied.

The job cuts are part of efforts to cut costs by $800 million next year, Chief Executive Greg Brown said.

Motorola sold 25.4 million cellphones in the third quarter, down from the 28.1 million it sold in the second quarter. The company had said it expected a slight decline. With an 8.5% market share, it lost the spot as No. 3 cellphone maker worldwide to Sony Ericsson in the quarter, according to research firm IDC. Nokia Corp. and Samsung Electronics Co. are No. 1 and No. 2, respectively.

For Motorola, "the loss of share continues to be extremely worrisome," said Rick Franklin, an analyst at Edward Jones. "This business continues to run without any wheels."

The cellphone unit lost $840 million, including a $370 million write-down of inventory. Revenue was $3.1 billion.