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NEW YORK - Motorola warned today that it would post a first-quarter loss and cut its forecast for revenue far below Wall Street expectations, citing weaker-than-expected sales of mobile devices.
The company, which had seen a 30 per cent drop in its share price after disappointing investors for the last two quarters, also said its chief financial officer was retiring and that it was appointing a chief operating officer .
Motorola also appeared to give in to billionaire investor Carl Icahn's demands for a bigger share buyback by announcing that it will accelerate repurchase plans.
The No 2 maker of mobile phones said it expects a first-quarter net loss of 7 cents to 9 cents per share, including 9 cents in charges.
It cut its forecast for revenue to a range of US$9.2 billion ($13.1 billion) to US$9.3 billion, compared with the previous US$10.4 billion to US$10.6 billion. Analysts on average had been expecting revenue of US$10.4 billion, 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 said the revision was due to lower-than-expected sales and operating earnings at its mobile phone division and a difficult pricing environment, particularly for low-tier products, and a limited advanced phone portfolio.
"Performance in our mobile devices business continues to be unacceptable and we are committed to restoring its profitability," Chief Executive Ed Zander said in a statement.
"After a further review following the leadership change in our Mobile Devices business, we now recognize that returning the business to acceptable performance will take more time and greater effort," Zander said.
The company also said it would accelerate the buyback of US$2 billion of common stock, increasing its share repurchase programme to US$7.5 billion worth of common stock.
Icahn has taken a 2.48 per cent stake in Motorola to pressure the company into making a bigger share buyback.
Motorola said Chief Financial Officer David Devonshire would retire effective April 1. Thomas Meredith would be appointed as acting chief financial officer.
Motorola also said it had appointed Greg Brown as president and chief operating officer, effective immediately.
Devonshire had said last month he expected a "rocky" first half of the year.
- REUTERS
