Motorola plunged to a US$397 million loss in the third quarter, unable to control costs to match its declining revenue.
The company announced plans to cut costs by $800 million in 2009, but has postponed plans to sell its loss-making mobile devices division until 2010. Instead, it will revamp its product line to focus on phones running software from Google and Microsoft.
The company reported revenue of $7.48 billion for the three months ended Sept. 27, down from $8.81 billion for the year-earlier quarter, and made a net loss of $397 million, a sharp drop from its net profit of $60 million a year earlier. The company losses amounted to a loss of $0.18 per share. Analysts polled by Thomson Reuters had expected earnings of $0.02 per share.
Revenue from mobile devices totalled $3.1 billion for the third quarter, down 31 percent from a year earlier, while the division’s operating loss ballooned to $840 million from $248 million a year earlier. The quarter’s losses include charges related to the company’s plans to simplify its product portfolio and the software platforms it uses.
Co-CEO Sanjay Jha confirmed reports that Motorola will develop mobile phones for the Android platform. The company is also abandoning the Symbian UIQ operating system, and its proprietary mobile Linux OS, to focus on the Google-backed platform and Microsoft’s Windows Mobile.
Defending the decision on the company’s conference call with analysts on Thursday, Jha said that the experience of trying to commercialize a proprietary operating system and create an ecosystem of third-party developers around it has demonstrated the difficulty of the task. “We see a large ecosystem centered around the mobile Internet, Android, Windows Mobile,” Jha said. He added that Motorola is working closely with the Android platform group and plans to open an office in Seattle to work more closely with Microsoft on Windows Mobile.
Motorola aims to have an Android-based handset out in time for the fourth-quarter holiday sales season in 2009.