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Motorola Announces Fourth-Quarter and Full-Year Financial Results
Posted: 03-Feb-2009 [Source: Motorola]

[Motorola reports $3.6 billion GAAP net loss in the fourth quarter of 2008 and suspends quarterly cash dividends on the company's common stock effective immediately.]

Schaumburg, IL -- - 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

Motorola, Inc. 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.

Operating Results

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(TM) luxury phone, Motorola KRAVE(TM) 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(TM) 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.

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