Amid a tit-for-tat legal skirmish with its ex-CFO and relentless economic woes, Motorola reported that its handset segment continued to go downhill in the first quarter.
The company’s flagship handset segment continued to hemorrhage cash as revenue plunged 45 percent to $1.8 billion on sales of only 14.7 million handsets.Losses at the cell phone division hit $509 million compared to last year’s loss of $418 million. This quarter’s figures are an improvement over the fourth quarter of 2008, when the segment lost $595 million.
Things could be looking up for Motorola handsets. Industry insiders have spread speculation that the company may manufacture the rumored Microsoft “Pink.” The supposed multimedia cell phone is reported to be an iPhone challenger.
Motorola has struggled to follow the success of its RAZR phone after coming up short with its smartphone offerings. The company plans to launch new smartphones with Google’s Android OS toward the end of the year, which could help it regain favor with consumers.
The company’s other segments performed better. Sales of TV set-top boxes, cable modems and related equipment fell 16 percent to $2 billion in the company’s Home and Network Mobility division. The division’s sales are likely to improve thanks to a recently anded contract for wireless network equipment from China Unicom.
Sales fell 11 percent to $1.6 billion in the company’s Enterprise Mobility division, which specializes in equipment like bar code scanners.
Overall, the company lost $231 million, or 13 cents per diluted share, compared to last year’s loss of $194 million, or 9 cents per share. The losses included a charge of 7 cents per share stemming from the company’s extensive job cuts and a gain of 2 cents per share from the repurchase of long-term debt. Motorola aims to slash expenses by $1.5 billion this year and expects losses to narrow between 3 cents to 5 cents per share in the second quarter of 2009.
Motorola is engaged in an ongoing legal battle with former CFO Paul Liska, who alleges he was fired for questioning the company’s financial guidance for its troubled handset division.
Motorola says Liska’s exit was part of a $37 million “extortion-like scheme” against the company, and cited poor job performance as the reason for his dismissal. The company also claims that Liska destroyed potential evidence by wiping information from his company laptop before returning it and filed a motion requesting sanctions against him.
Yesterday, Cook County Judge Allen Goldberg said it was premature to consider sanctions. He suggested the two sides hire a neutral computer forensics expert to help resolve the issue before a July 31 hearing.
A Motorola spokesman did not reply to a request for comment by press time.
