Motorola eyes weak Q1, halts dividend

By Sinead Carew

NEW YORK (Reuters) - Motorola Inc forecast a deeper-than-expected first-quarter loss, suspended its quarterly dividend and said its chief financial officer left, sending its shares down as much as 14 percent.

The embattled cell-phone maker slid to fifth place from fourth in global rankings in the last quarter and said on Tuesday it expects its handset division to post another loss in 2009 and declined to say when it sees it breaking even.

Analysts said the combination of weaker outlook, the dividend cut, the CFO departure and the lack of a clear time frame for a recovery was unnerving shareholders.

"There had been a little hope they might be able to stabilize things by late 2009," said Pacific Crest analyst James Faucette. "I think that the CFO leaving definitely raises some eyebrows as well."

But Motorola executives said in an interview the departure of Paul Liska -- CFO since February 2008 -- related to the delay of its separation plan for the cellphone unit rather than any financial control or reporting issues.

Motorola, which also makes television set-top boxes and wireless gear, forecast a first-quarter loss per share of 10 cents to 12 cents, versus the average Wall Street estimate for a loss of 5 cents, according to Reuters Estimates.

Its shares were down 51 cents, or 11 percent, at $4.03 in afternoon trading on the New York Stock Exchange, after falling as low as $3.88 and dropping over 60 percent in the last year.

Analysts said they had expected a weak first quarter for mobile phones, but had hoped the rest of the business, which makes home and operator and enterprise equipment, would fare better than Motorola's forecast implied.

Motorola said it will focus on mid-tier to high-end phones, after losing ground for two years as it lacked popular enough phones to compete with Nokia, Samsung Electronics Co Ltd, LG Electronics Inc and Sony Ericsson.

Sanjay Jha, co-chief executive and head of the cellphone unit told analysts on a conference call that Motorola would have "its work cut out for it in 2009" and declined to say whether he expects the unit to break even in 2010 or 2011.

But the executive, who was hired in August, said in an interview mobile devices' operating loss would narrow this year and he was upbeat about the prospects for a turnaround.

"The path that we're on, the product road map we have, the cost structure with which we'll exit 2009 with gives me great confidence that we will get to that point in a reasonable time frame," he said.

In the meantime, he expects Motorola's sales volumes to fall faster than the industry in the current quarter. The company, which had 50 phone models in 2008 will make fewer in 2009 and will take high-volume devices that cost less than $50 off its priority list and instead focus on $50 to $200 devices.

Jha said Motorola plans a variety of advanced devices including multiple based on Google Inc's Android software with an emphasis on social network services for around the fourth quarter this year.

Motorola plans to make phones based on an upcoming version of Microsoft Corp's Windows Mobile software in 2010.