NEW YORK (AP) — Motorola is scheduled to report its first-quarter results on Thursday morning. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Motorola faces a very tough challenge in its cell phone business, which was ailing even before the economic downturn. For a while, investors were imputing a negative stock value to the business, meaning Motorola would have been better off without it.
That glum view seems to have abated — Motorola shares have been on a tear recently. But analysts aren’t expecting particularly strong results out of the company for the first quarter, or any real sign of a turnaround.
Even Motorola’s healthier units, which contribute two-thirds of its revenue, are being affected by the economic downturn, but they’re holding up better than cell phones.
In particular, the police radios and other government and public safety equipment sold by Motorola’s Enterprise Mobility division should make up nearly half of operating profits, according to analyst Mark McKechnie of Broadpoint AmTech.
Enterprise Mobility also makes retail and corporate equipment, like bar code scanners.
Motorola’s third division, Home and Networks Mobility makes TV set-top boxes, cable modems and related gear.
Last year, Motorola said it would spin off its handset unit, then put that plan on hold when the economy and stock market turned south.
Now, Motorola is trying to cut costs by $1.5 billion this year, mainly from the cell phone division. It announced 4,000 job cuts in January, in addition to the 3,000 it slashed in October.
When the job cuts are complete, around 12,000 workers will have left the company since December 2007, when there were 66,000 employees, an 18 percent reduction. Motorola also has frozen its pension plans and reduced executive pay.
BY THE NUMBERS: Motorola has forecast a loss of 10 to 12 cents per share for the first quarter, excluding charges. Analysts polled by Thomson Reuters are on average expecting the loss to come in at 11 cents per share. They expect revenue of $5.6 billion.
Motorola has said that it expects charges of $229 million before taxes in the quarter, mainly for severance payments to roughly 5,600 employees.
Analysts will also be looking at the number of cell phones Motorola sold in the quarter. In the fourth quarter, that number was 19.2 million. If it sells more than the 14.5 million reported by Sony Ericsson for the first quarter, Motorola would regain its no. 4 ranking in global sales.
ANALYST TAKE: William Choi at Jefferies & Co. expects Motorola to report selling 14.3 million phones in the quarter. Cheap phones and smartphones have held up the best in the economic downturn, and Motorola isn’t big in either category, he noted.
McKechnie of Broadpoint AmTech believes value investors will focus on Motorola’s non-cell phone businesses, and any news of an exit from that business or a turnaround would boost shares.
WHAT’S AHEAD: On Monday, Motorola said it had won a contract for wireless network equipment from China Unicom. Analysts believe it could yield a meaningful contribution to Motorola’s sales later in the year.
Motorola has said it plans to launch new smartphones using Google’s Android operating system toward the end of the year.
On the conference call following the previous earnings report, Motorola co-CEO Greg Brown said CFO Paul Liska was leaving the company and praised his work. Later, the company said Liska had been fired for cause. Liska has sued the company over his termination, and ugly words are being traded by the parties in the suit, which looks set to be a long-running story.
STOCK PERFORMANCE: Motorola shares were essentially flat during the first quarter, but have staged a strong recovery since March, rising 71 percent.
