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Electronics Production | April 18, 2007

Motos` profit and revenue falls

Motorola has reported a net loss and lower sales for the first quarter of 2007, reflecting its recent, well publicized struggles in the mobile handset market.
Net sales of $9.4 billion for the quarter were down from $9.6 billion reported in the same quarter a year ago. After accounting for costs related to acquisitions, a legal settlement, and a major reorganization of the company's Mobile Devices business unit, overall profits were reduced to a net loss of $118 million.

Mobile Devices segment sales were $5.4 billion, down 15 percent compared with the year-ago quarter, while an operating loss of $231 million compared with operating earnings of $701 million in the year-ago quarter. Lower sales and earnings were blamed on lower overall unit volumes, particularly in emerging markets and Europe, though North and Latin Americas continued to produce strong sales for the company. During the first quarter, Motorola shipped 45.4 million handsets, for an estimated 17.5 percent share of the global handset market for the quarter.

Reorganization efforts during the quarter included discontinuing six legacy products while introducing more products based on Linux/Java; continued workforce reductions; using alternate sources for silicon chips; and simplifying its price structure and distribution channel.

Networks and Enterprise segment sales were $3 billion, up 20 percent from the year-ago quarter. Operating earnings were $343 million, compared with operating earnings of $328 million in the year-ago quarter, though operating margin slipped to 11.4 percent from 13 percent.

Connected Home Solutions segment sales were $1 billion, up 42 percent compared with the year-ago quarter. Operating earnings were $113 million, compared with operating earnings of $47 million in the year-ago quarter. Operating margin was 10.9 percent compared to 6.4 percent in the year-ago quarter.

Motorola projected growth for the second quarter will be essentially flat with the first. Earnings per share are expected to be in the range of 2 to 3 cents, excluding reogranization charges.

The company expects the Mobile Devices business to experience a gradual recovery in the second half and be profitable for the full year. Overall for the full year, Motorola expects to be profitable and to generate positive operating cash flow.
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