Motorola Reports First-Quarter Financial Results
April 30, 2009
- First-quarter sales of $5.4 billion
- First-quarter GAAP net loss from continuing operations of $0.13 per share, including net charges of $0.05 per share from highlighted items, primarily related to cost-reduction initiatives
- Increased annual 2009 cost-savings target by $200 million to $1.7 billion
- Mobile Devices sales of $1.8 billion; shipped 14.7 million handsets
- Home and Networks Mobility sales of $2.0 billion; operating earnings of $115 million
- Enterprise Mobility Solutions sales of $1.6 billion; operating earnings of $156 million
to view the financial tables that are an integral part of this release.
Click here to view additional financial information.
SCHAUMBURG, Ill. – April 30, 2009 – Motorola, Inc. (NYSE: MOT) today reported sales of $5.4 billion in the first quarter of 2009. The total GAAP net loss in the first quarter of 2009 was $231 million, or $0.10 per share, which includes net income of $0.03 per share from discontinued operations. The GAAP net loss from continuing operations was $291 million, or $0.13 per share. The GAAP net loss from continuing operations includes net charges of $0.05 per share from highlighted items, primarily related to cost-reduction initiatives.
Total cash* at the end of the first quarter was $6.1 billion, down from $7.4 billion at the end of 2008. The cash decline was driven in large part by a $700 million reduction in accounts receivable sold and approximately $200 million in restructuring-related payments. The Company expects to generate positive cash flows in the second half of the year through improved earnings and continued working capital improvements.
Greg Brown, president and co-CEO of Motorola and CEO of Broadband Mobility Solutions, said, “Our Broadband Mobility Solutions businesses performed well in a challenging environment, by delivering value for our customers and adding to an already impressive portfolio of products. We will continue to manage our costs to ensure alignment with current market conditions. We are executing with operational and financial discipline while we make targeted investments for our future.”
Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices, added, “In the quarter at Mobile Devices, we implemented aggressive actions to reduce costs and also gained solid traction on improving operational effectiveness. Customer feedback on our smartphone roadmap remains very positive, and we plan to have differentiated Android-based devices in stores in time for the fourth-quarter holiday season. We significantly reduced the operating loss in Mobile Devices compared with the fourth quarter of 2008 and have increased the 2009 annual cost-reduction target to more than $1.3 billion.”
Mobile Devices segment sales were $1.8 billion, down 45 percent compared to the year-ago quarter. The GAAP operating loss was $509 million, compared to an operating loss of $418 million in the year-ago quarter. The segment reduced its operating loss sequentially from $595 million in the fourth quarter of 2008. During the quarter, Mobile Devices shipped 14.7 million handsets and estimates its share of the global handset market was 6.0 percent.
Mobile Devices highlights:
- Continued progress on differentiated smartphone devices targeted to launch in the fourth quarter of 2009
- Launched seven new phones, including three GSM devices, two 3G devices and two CDMA devices
- Launched MOTOSURF A3100, featuring 3G and Wi-Fi; and Evoke QA4, Motorola’s latest social networking feature phone
- Introduced and began shipping MOTO™ W233 Renew, the world’s first phone made with recycled plastics
Home and Networks Mobility segment sales were $2.0 billion, down 16 percent compared to the year-ago quarter. GAAP operating earnings were $115 million, compared to operating earnings of $153 million in the year-ago quarter.
Home and Networks Mobility highlights:
- Shipped more than 4.3 million digital entertainment devices
- Introduced industry’s first commercial receiver/decoder (IRD) to deliver three-channel MPEG-4 to MPEG-2 High Definition TV
- Developed DVR solution with Time Warner using Tru2Way™ software that enables consumers to share content throughout the home
- Announced major GSM network expansion awards with Mobily in Saudi Arabia and MTN Ghana
- Continued momentum with launch of WiMAX network in Jordan and introduction of first WiMAX outdoor customer premise equipment (CPE) with integrated VoIP
Enterprise Mobility Solutions segment sales were $1.6 billion, down 11 percent compared to the year-ago quarter. GAAP operating earnings were $156 million, compared to operating earnings of $250 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
- Celebrated delivery of one-millionth TETRA terminal
- Expanded public safety portfolio with new ASTRO 25 Express system, a single-site Project 25 voice trunked system
- Introduced MC55 enterprise digital assistant, empowering mobile workers by bringing data, voice and applications to the point of business activity
- Secured public safety awards for State of Mississippi, Pernambuco State in Brazil and Danish Police
- Completed sale of Biometrics business to SAFRAN
Second-Quarter 2009 Outlook
The Company’s outlook for the second quarter is a net loss from continuing operations of $0.03 to $0.05 per share. This outlook excludes charges associated with the Company’s operating expense reduction initiatives, as well as any other items of the variety typically highlighted by the Company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
(In millions, except per share amounts)
Loss from continuing operations**
Diluted earnings (loss) per common share:
Weighted average diluted common shares outstanding
**Amounts attributable to Motorola, Inc. common shareholders
The table of highlighted items for the first quarter of 2009 is as follows:
Conference Call and Webcast
EPS Impact Exp/(Inc)
Reorganization of business and similar charges
Gain from the repurchase of long-term debt
Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Thursday, April 30, 2009. The conference call will be webcast live with audio and slides at www.motorola.com/investor.
This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about: cost savings and financial impact from cost-reduction actions, levels of cash generation and consumption in 2009, the timing and impact of the launch of new products and Motorola’s financial outlook for the second quarter of 2009. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 30 in Item 1A of Motorola’s 2008 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola’s actual results to differ materially from those estimated or predicted in the forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to: (1) the Company’s ability to improve financial performance and increase market share in its Mobile Devices business, particularly in light of slowing demand in the global handset market; (2) the level of demand for the Company’s products, particularly in light of global economic conditions which may lead consumers, businesses and governments to defer purchases in response to tighter credit and negative financial news; (3) the Company’s ability to introduce new products and technologies in a timely manner; (4) the possible negative effects on the Company’s business operations, financial performance or assets as a result of its plan to create two independent, publicly traded companies; (5) unexpected negative consequences from the Company’s ongoing restructuring and cost reduction activities, including as a result of significant restructuring at the Mobile Devices business; (6) negative impact on the Company’s business from the ongoing global financial crisis and tightening in the credit markets, which may include: (i) the inability of customers to obtain financing for purchases of the Company’s products; (ii) the viability of the Company’s suppliers that may no longer have access to necessary financing; (iii) reduced value of investments held by the Company’s pension plan and other defined benefit plans; (iv) fair and/or actual value of the Company’s debt and equity investments differing significantly from the fair values currently assigned to them, including as a result of additional impairments in the Company’s Sigma Fund; (v) counterparty failures negatively impacting the Company’s financial position; (vi) difficulties or increased costs for the Company in obtaining financing; and (vii) the inability of the Company to sell accounts receivable and long-term receivables in volumes and on terms comparable to historical practices; (7) the economic outlook for the telecommunications and broadband industries; (8) the Company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (9) risks related to dependence on certain key suppliers; (10) the impact on the Company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (11) risks related to the Company’s high volume of manufacturing and sales in Asia; (12) the creditworthiness of the Company’s customers and distributors, particularly purchasers of large infrastructure systems; (13) variability in income received from licensing the Company’s intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of the strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact on the Company from continuing hostilities in countries where the Company does business; (17) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the Company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.
*“Total cash” equals Cash and cash equivalents plus Sigma fund (current and non-current) plus Short-term investments.
Motorola is known around the world for innovation in communications and is focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $30.1 billion in 2008. For more information, please visit www.motorola.com