Motorola Announces Fourth-Quarter and Full-Year Financial Results
Feb. 03, 2009
- Fourth-quarter sales of $7.1 billion
- Fourth-quarter GAAP net loss of $1.57 per share, including net charges of $1.56 per share for highlighted items, primarily non-cash related
- Implementing cost-reduction actions of approximately $1.5 billion for 2009
- Fourth-quarter operating cash inflow of $201 million; total cash position of $7.4 billion
- Suspending quarterly cash dividend
- Home and Networks Mobility sales of $2.6 billion; operating earnings increased to $257 million, an increase of 34 percent compared to the fourth quarter of 2007
- Mobile Devices sales of $2.35 billion; shipped 19.2 million handsets
- Enterprise Mobility Solutions sales of $2.2 billion; operating earnings increased to $466 million, an increase of 3 percent compared to the fourth quarter of 2007
Click here to view the financial tables which are an integral part of this release
Click here to view additional financial information
SCHAUMBURG, Ill. – February 3, 2009 – Motorola, Inc. (NYSE: MOT) today reported sales of $7.1 billion in the fourth quarter of 2008. The GAAP net loss in the fourth quarter of 2008 was $3.6 billion, or $1.57 per share. This includes net charges of $1.56 per share from highlighted items, which are outlined in the table at the end of this press release. Substantially all of the charges for the highlighted items are non-cash and primarily relate to the impairment of goodwill and an increase in deferred tax asset valuation reserves.
For the full year 2008, sales were $30.1 billion. The GAAP net loss was $1.84 per share, which includes net charges of $1.86 per share from items highlighted in the Company’s quarterly earnings releases.
During the quarter, the Company generated positive operating cash flow of $201 million. For the full year, the Company generated positive operating cash flow of $242 million and ended the year with a total cash* position of $7.4 billion.
The Company also announced today that its Board of Directors voted to suspend the declaration of quarterly cash dividends on the Company's common stock, effective immediately. The Board believes suspending the dividend will further strengthen the Company’s balance sheet and enhance its financial flexibility.
Greg Brown, Motorola’s president & co-chief executive officer and CEO of Broadband Mobility Solutions, and Sanjay Jha, co-chief executive officer and CEO of Mobile Devices, said, “In the fourth quarter, we generated positive operating cash flow of $201 million and ended the year with total cash of $7.4 billion.”
“In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices. The cost-reduction actions underway are expected to generate aggregate savings of approximately $1.5 billion in 2009,” added Brown and Jha.
Mobile Devices segment sales were $2.35 billion, down 51 percent compared with the year-ago quarter. The operating loss was $595 million, including $119 million of highlighted items, compared to an operating loss of $388 million in the year-ago quarter. For the full year 2008, sales were $12.1 billion, a 36 percent decrease compared to 2007, and the segment incurred an operating loss of $2.2 billion, compared to an operating loss of $1.2 billion in 2007. During the quarter, the Company shipped 19.2 million handsets and estimates its share of the global handset market was 6.5 percent.
Mobile Devices fourth-quarter highlights:
- Continued to make progress on the smartphone roadmap; on target to launch next-generation devices during the fourth quarter of 2009
- Launched 15 new phones, including six GSM devices, one 3G device, five CDMA phones and three iDEN handsets
- Continued global rollout of AURA™ luxury phone, Motorola KRAVE™ ZN4 full-touch phone and QA30 HINT messaging slider
- Announced plans to further reduce cost structure; expect cost savings totaling more than $1.2 billion in 2009
Sanjay Jha, co-chief executive officer of Motorola and CEO of Mobile Devices, said, “We continue to take appropriate action to address the downturn in the global economy as well as the challenges related to our current Mobile Devices portfolio. We are aggressively developing innovative new products, and we are encouraged by the positive customer feedback on our smartphone roadmap.”
Home and Networks Mobility segment sales were $2.6 billion, down 5 percent compared with the year-ago quarter. Operating earnings increased to $257 million, compared with operating earnings of $192 million in the year-ago quarter. For the full year 2008, sales were $10.1 billion, a 1 percent increase compared to 2007, and the segment generated operating earnings of $918 million, compared to $709 million in 2007.
Home and Networks Mobility fourth-quarter highlights:
- Expanded operating margin to 9.9 percent of sales from 7.0 percent of sales in the year-ago quarter
- Shipped 4.7 million digital entertainment devices, compared to 3.4 million in the year-ago quarter, due to continued strong demand for HD, HD/DVR and IPTV devices
- Continued to make progress in 4G technologies, including initial sales on WiMAX and completion of industry’s first over-the-air Long-Term Evolution (LTE) data sessions in the 700MHz spectrum
Enterprise Mobility Solutions segment sales were $2.2 billion, up 4 percent compared with the year-ago quarter. Operating earnings increased to $466 million, compared with operating earnings of $451 million in the year-ago quarter. For the full year 2008, sales were $8.1 billion, a 5 percent increase compared to 2007, and the segment generated operating earnings of $1.5 billion, compared to $1.2 billion in 2007.
Enterprise Mobility Solutions fourth-quarter highlights:
- Achieved operating margin of 21.0 percent
- Maintained momentum around new APX™ product line with initial shipments of infrastructure equipment to address public safety and homeland security priorities
- Launched first product integrating AirDefense acquisition and placed in Gartner’s Leaders Quadrant for Wireless LAN Infrastructure
Brown added, “Despite the challenging economic environment, our Broadband Mobility Solutions businesses performed very well in the fourth quarter and throughout the year. Throughout 2009, aggressive cost management and prioritizing our investments will be a top priority. These actions, as well as our strong portfolio of outstanding products and solutions, will help us build on our leadership positions in the broadband, video, public safety and enterprise mobility solutions markets.”
First-Quarter 2009 Outlook
The Company’s outlook for the first quarter is a loss of $0.10 to $0.12 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)
Earnings (loss) from continuing operations
Net earnings (loss)
Diluted earnings (loss) per common share:
Weighted average diluted common shares outstanding
The table of highlighted items for the fourth quarter of 2008 is as follows:
EPS Impact Exp/(Inc)
Deferred tax asset valuation allowance
Reorganization of business charges
Impairment of Sigma Fund investments
Separation-related transaction costs
Income tax benefit resulting from tax audit settlement
Pension curtailment gain
Liability extinguishment gain
Reversal of tax-related interest accruals
Conference Call and Webcast
Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Tuesday, February 3, 2009. The conference call will be web-cast 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, the launch of new products and Motorola’s financial outlook for the first quarter of 2009. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 27 in Item 1A of Motorola’s 2007 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 severe 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 Company’s debt and equity investments could differ 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; and (vi) difficulties or increased costs for the Company in obtaining financing; (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.