Moto still tripping over phones

Motorola CEO Ed Zander has been calling the company’s handset results “unacceptable,” with a pledge to improve performance. But it looks like it’s going to take several quarters to try to fix the problem. The company posted first quarter sales of $9.43 billion – close to its previous forecast — but lower than the first quarter of 2006, and a net loss of $181 million.

Moto’s wings got clipped by the handset business. Motorola’s mobile devices division brought in $5.4 billion in sales, down 15 percent compared with the year-ago quarter, and an operating loss of $231 million, compared with operating earnings of $701 million in the year-ago quarter. Blame it on the profitless prosperity of cheap phones, and over reliance on the RAZR.

Mark Sue from RBC says:

It’s got to stop getting worse before it gets better and we’re looking for another bumpy ride in 2Q as channel inventories clear and Motorola adjusts its mobile devices business model.

Motorola says it expects a “gradual recovery” in the mobile devices division starting in the second half and expects to be profitable for the full year.

Not that we are surprised at the results – Motorola does okay for a couple of quarters, press applauds and then the sky falls. Its like an iPod set on repeat-playback mode.

Seeking Alpha points out: “the company managed to end the quarter with higher inventory than when it began. That, in turn, sounds like a recipe for further discounting and more trouble for the entire wireless sector.” True dat.

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