Motorola Inc. (NYSE: MOT) said Wednesday that it expects another loss for its second quarter as mobile phone sales continue to slide.
Motorola said sales for the quarter ended June 30, would be between $8.6 billion and $8.7 billion, a decline of about 8 percent from the $9.4 billion the company recorded in the first quarter.
The decline represents a loss of 2 cents to 4 cents per share, coming as a surprise to Wall Street analysts. Thomson Financial had projected the company to earn 2 cents per share on $9.29 billion in revenue.
The company's shortfall in sales and earnings for the second quarter is primarily attributable to lower overall unit volumes in the Mobile Devices business in Asia and Europe, Motorola said in a statement.
During the June quarter, Motorola estimated that it shipped 35 million to 36 million mobile handsets.
[Motorola's] weaker than expected Q2 results reinforce our view that the turnaround in the companyâ€™s handset business will take several quarters and could extend into 2008, Richard Valera of Needham told clients on Thursday.
Schamburg, Ill.-based Motorola has been searching for a follow-up to its widely successful Razr phone for over a year. The thin, clam-shell phone, which went to sell over 50 million units, has seen its price drop from nearly $500 a unit to being given out for free from certain carriers, pummeling operating margins. Motorola will begin to sell an updated version of the phone this month, the Razr2.
As a result, last month Motorola said it would cut an additional 4,000 jobs on top of 3,500 previously announced jobs as part of its plan to reduce costs by $600 million in 2008.
In a move to reverse the deteriorating sales, the company also named Stu Reed as its new executive vice president of mobile devices. Reed had previously run supply-chain operations. Reed replaces Ray Roman, head of sales, and Terry Vega, head of global devices, who were jointly running the division.