Discussion in 'Stocks' started by S2007S, Mar 21, 2007.

  1. S2007S


    The #2 maker of mobile phones is warning again, hmmmm.

    HAL yesterday and MOT today, wonder what comes Thursday.

    Motorola warns of Q1 loss
    Wednesday March 21, 6:16 pm ET
    By Sinead Carew

    NEW YORK (Reuters) - Motorola Inc. (NYSE:MOT - News) warned on Wednesday it will post a first-quarter loss and cut its revenue forecast to far below Wall Street expectations due to weak cell phone sales, driving shares down nearly 6 percent.

    The No. 2 maker of mobile phones, which has disappointed investors for the last two quarters, also said it would accelerate its share buyback program, appearing to give in to demands by billionaire investor Carl Icahn.

    Motorola also said Chief Financial Officer David Devonshire would retire on April 1, and appointed a new chief operating officer, Greg Brown.

    The company cut its first-quarter revenue forecast to a range of $9.2 billion to $9.3 billion, from its January estimate of $10.4 billion to $10.6 billion. Analysts on average had expected $10.4 billion, according to Reuters Estimates.

    Motorola forecast a per-share loss of 7 cents to 9 cents in the quarter, including 9 cents in special charges. Analysts had been expecting earnings of 17 cents per share excluding any items, according to Reuters Estimates.

    "This is worse than I expected. They're losing a ton of money in phones," said Edward Snyder, an analyst at Charter Equity Research. "They need to release a set of new phones designed for lower prices, they need to design lower priced phones that are designed to be profitable at a much lower price. And that's going to take about a year and half."

    Motorola cited weaker-than-expected mobile phone division, a difficult pricing environment, particularly for low-tier products, and a limited portfolio of advanced phones.

    "Clearly, the recovery will be substantially slower than we anticipated," Brown, the newly appointed COO, told Reuters in a telephone interview. "(The second quarter) we're expecting to be difficult as well."

    Motorola has been struggling with a sharp fall in phone prices as it tried to hold on to market share amid stiff competition in emerging markets and against industry leader Nokia (Helsinki:NOK1V.HE - News). It has also been criticized for a stale phone line up.

    Chief Executive Ed Zander told Reuters Motorola chose not to react to price cuts this quarter, so that reduced volume.

    He also told analysts on a call that he expected the mobile business to recover gradually in the second half and turn a profit for the year, but full-year sales and profit would be "substantially" below prior guidance.

    John Slack, an equity analyst at Morningstar Inc., said the first-quarter revisions were disappointing, even though investor expectations were not high to begin with.

    However, he added, "It's encouraging that Motorola is not chasing market share as much, and instead appears to be focusing on getting back to profitability."

    Besides challenges in its core business, Motorola also faced demands from Icahn, who has taken a 2.48 percent stake in the company and was seeking a board seat to pressure management into making a bigger share repurchase.

    Motorola said on Wednesday it will buy back $2 billion worth of shares on an accelerated basis and was increasing its current share buyback authorization program for the period ending July 2009 to $7.5 billion from $4.5 billion.

    The company had already bought back $1 billion worth of shares under its existing program.

    Some analysts said the larger buyback could provide support for Motorola's share price, but Prudential analyst Inder Singh said the company also needs to come up with better phones.

    "Unless you have a really new compelling product you're going to come out on the short end of it ... If you've wowed people with one product, the bar's been raised, so you have to outperform yourself," Singh said. "Obviously, you don't do that by painting phones different colors."

    Motorola said Thomas Meredith will be acting CFO.

    Its shares fell to $17.69 in extended trading from their New York Stock Exchange close of $18.74.
  2. Dead money on handset makers.

    I read a research report that was actually good that said aside from Blackberries, the only units increasing in sales are low end.