Moto: Hello Zero

Motorola Inc. (NYSE: MOT)'s second-quarter results are as bad as the networking giant had already warned they would be, with handset shipments slumping by approximately a third this spring. (See Motorola Warns Again.)

The Schaumburg, Ill.-based company posted a net loss of $28 million, or $0.01 a share -- compared with a profit of $1.38 billion, or $0.55 a share, in the year-ago quarter -- on revenues that fell 19 percent to $8.7 billion. Thomson Financial analysts had expected earnings of less than a cent per share on revenues of $8.64 billion; Reuters Research analysts had expected EPS of zero. Motorola, which has been the second-ranked handset vendor after Nokia Corp. (NYSE: NOK) for years, may see rivals like Samsung Electronics Co. Ltd. (Korea: SEC) overtake it as its market share declines, according to analysts. Motorola says it shipped 35.5 million phones in the second quarter, giving it around 13.5 percent of the worldwide market. (See Moto Losing Ground.)

Motorola reiterated its latest warning that the mobile devices unit will not be profitable in 2007, but it expects some financial improvement in the second half of year.

This week, Motorola has reorganized its business into three units in a bid to shore up its losses. These are: mobile devices; an enterprise unit that now includes the Good mobile email business; and a network equipment unit that includes its cable and set-top business.

Mobile devices is still the center of Motorola's pain, however. The company has not managed to replicate the worldwide success of its RAZR phone and has seen a decline in average selling prices for phones as competition gets more fierce. (See The Perils of Being Slim.)

The firm has already cut 7,500 jobs in a bid to to achieve $1 billion in cost savings through 2008.

— Dan Jones, Site Editor, Unstrung

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