Motorola posts quarterly loss, revenue down

NEW YORK (Reuters) - Motorola Inc. (MOT.N) posted its second straight quarterly loss on Thursday as a lack of advanced mobile phones cost the company market share and dropped it into third place in the industry behind Nokia (NOK1V.HE) and Samsung Electronics (005930.KS).

Motorola's results were in line with lowered expectations following the company's earnings warning last week. But it further disappointed some analysts by failing to give a revenue forecast for the third quarter.

"The big worry remains the top line, and market share in handsets, where they're ceding a ton," said Cowen & Co analyst Matthew Hoffman.

Motorola said it shipped 35.5 million mobile phones in the second quarter, giving it an estimated 13.5 percent share of the global market, down from about 17.5 percent in the first quarter. JPMorgan analyst Ehud Gelblum estimated Motorola's share at an even lower 12.8 percent for the second quarter.

The latest figures show that Samsung overtook Motorola as the industry No. 2, behind Nokia in the quarter.

After four straight disappointing quarters, Motorola Chief Executive Ed Zander has come under increasing pressure from shareholders, some of whom have called for his ouster.

But Chief Financial Officer Tom Meredith, who also sits on the Motorola board, told Reuters in an interview that the company was not looking for a successor and was confident in its leadership team.

Motorola posted a second-quarter loss from continuing operations of $38 million, or 2 cents a share, compared with a year-earlier profit of $1.35 billion, or 54 cents per share.

Including earnings from discontinued operations, Motorola's net loss was $28 million, or 1 cent per share.

Net sales fell 19 percent to $8.7 billion.

Hoffman said it was worrying that Motorola appeared to lose market share not only to Nokia, but to smaller rivals such as LG Electronics (066570.KS) and Sony Ericsson, a venture of Sony Corp (6758.T) and Ericsson (ERICb.ST).

In a conference call with analysts, CEO Zander said that Motorola was "doing the right things."

But he added, "Make no mistake about it, there is still a lot more to do."

OUTLOOK

Motorola repeated its expectation that the mobile devices unit, its biggest business, will not be profitable for the full year, but it said it expects the unit's results to improve in the second half.

It said it expects third-quarter earnings per share from continuing operations to be flat to slightly up from the second quarter, excluding items such as reorganization charges.

Cowen's Hoffman said Motorola's lack of revenue guidance could mean it expects more declines.

"It means they're prepared to continue to let (market) share decline, which is a longer-term concern," he said. "The main thing that will improve the long-term profitability of Motorola is an improvement of the handset portfolio."

Meredith said the lack of revenue guidance was due to the difficulty of predicting the highly competitive industry.

"Its just a question of prudence... given the volatility of the industry," Meredith said.

Zander said the company, which has been criticized for failing to develop a popular follow-up phone it its flagship Razr and for cutting prices of the Razr too quickly, needs new phones to help turn around the business.

He said Motorola was "working very hard on the 2008 portfolio" of mobile phones.

Motorola's mobile device unit sales fell 40 percent in the second quarter to $4.3 billion, and the unit posted a loss of $264 million, compared with operating earnings of $804 million a year earlier.

Motorola said its enterprise wireless unit, which sells equipment to corporate and government customers, posted a revenue increase of 42 percent, to $1.9 billion.

Sales for its television set-top box and network equipment business, which supplies to service providers, rose 9 percent to $2.6 billion.

Motorola said it has now sold 100 million versions of the Razr, which first came on the market in late 2004 and was still one of the company's best sellers in the quarter.

Motorola shares were up 30 cents to $18.30 in early afternoon trade on the New York Stock Exchange as some investors hoped the company's worst results were behind it. Analysts have also said that the shares, which have lost a third of their value since mid-October, have been trading recently on the value of the company's assets rather than its quarterly results.