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Motorola Warns Again

The world's number two cellphone maker, Motorola Inc. (NYSE: MOT), warned Wednesday afternoon that its mobile devices unit will not turn a profit for the entire year. (See Motorola Warns Again.)

The Schaumberg, Ill.-based networking giant had been predicting that it would see an improvement on the device front in the second half of the year. This afternoon, however, the company warned of a greater second quarter loss and said the unit will be unprofitable for the whole of 2007.

For the second quarter, the company expects sales to be in the range of $8.6 billion to $8.7 billion. Motorola had previously estimated that second quarter sales would be essentially flat with first quarter 2007 sales of $9.4 billion. It is blaming the shortfall largely on poor devices sales in Asia and Europe.

Motorola is predicting second quarter device shipments in the 35 to 36 million handset range. "The... Mobile Devices business is expected to have a larger operating loss in the second quarter as compared to the first quarter," Motorola says in a statement. "For the full year 2007, the company no longer expects the Mobile Device business to be profitable."

Motorola has struggled over the last few quarters to replicate the runaway success of its RAZR handset, while facing increasing competition on price from rivals such as Nokia Corp. (NYSE: NOK) and Samsung Corp. (See The Perils of Being Slim.) The firm has already cut 7,500 jobs in total in a bid to to achieve $1 billion in cost savings through 2008. The company expects a second quarter GAAP loss per share from continuing operations in the range of $0.02 to $0.04, including estimated net charges of approximately $0.03 to $0.04 per share related to the workforce reductions and other items. (See Moto Cuts Another 4,000.)

— Dan Jones, Site Editor, Unstrung

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