Motorola Posts 4Q Profit but Outlook Is Low
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Motorola Inc. showed progress in its turnaround efforts Thursday but a disappointing profit forecast sent its shares sliding.
Motorola stock fell 73 cents, or 9.9 percent, to $6.67 in morning trading.
The shares are still more than double what they were trading for in March, as optimism has grown that Motorola can salvage its cell phone business. The first fruits of its new approach, the Cliq and Droid smart phones, went on sale in the fourth quarter.
Those phones were well received, and Motorola reporting shipping 2 million units. But overall cell phone sales were lower than expected, at 12 million units. Total revenue came to $5.7 billion, missing the average forecast from analysts of $5.9 billion, according to Thomson Reuters.
However, analysts did not appear to have taken into account that Motorola deferred $200 million in revenue from sales of smart phones, amortizing it instead over two years, in a new accounting step.
Looking ahead, Motorola said it expects a loss in the first quarter of 1 cent to 3 cents per share, excluding unusual items. Analysts expected a profit of 3 cents.
Motorola co-CEO Sanjay Jha said the loss would come from the planned launch of several new smart phones, with the attendant sales, marketing and support costs. At the same time, he expects smart phone sales to be down from the fourth quarter, when Verizon Wireless put a massive push behind the Droid.
Read the full story on ABC News.
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