Situation 'grimmer' as Motorola loses $3.6 billion in quarter

Motorola mot inched closer to the financial edge on Tuesday, reporting a staggering fourth-quarter loss of $3.6 billion and deep deterioration of its once-storied cellphone business.

The company recorded a string of charges to write down the cost of its cellphone business, which was in the process of being spun off when the economy soured. The spinoff was put on hold last fall. The company offered no time frame for when, or even if, the cellphone business might become an independent company.

The Schaumburg, Ill.-based equipment maker on Tuesday also suspended its dividend and announced the departure of its chief financial officer, Paul Liska, who was appointed a year ago.

"We're witnessing an American technology icon imploding," says Roger Entner, head of telecom research for Nielsen.

Motorola invented wireless as a class of service more than 30 years ago; its engineers also created the world's first cellphone.

Unless CEO Greg Brown can turn things around quickly, Entner says, he doesn't expect Motorola to be around two years from now. "It's getting grimmer by the day."

Motorola said it sold 19.2 million cellphones in the quarter, less than half what it sold in the same 2007 period. Revenue declined 26% year-over-year.

Trying to conserve cash, Motorola recently announced plans to cut 4,000 jobs — on top of the 3,000 reductions it announced last fall. Suspension of the dividend, a hallmark of Motorola for decades, is another cash-saving move.

One of Motorola's biggest problems, Entner says, is its aging product line. It scored a hit a few years ago with the Razr, but never had a follow-up. Motorola was also slow to jump on the smartphone craze, leaving it flat-footed when the Apple iPhone stormed the market. Then the economic slowdown hit, sending ripples throughout the wireless market.

Other parts of Motorola were profitable. Earnings in the networks division, which makes cable TV gear, rose 34%. Enterprise mobility, which makes communications equipment for emergency personnel, rose 3%. The two units, together, account for about two-thirds of Motorola's annual sales.

Motorola shares fell 11%, closing at $4.04.

Contributing: Associated Press