Motorola said Wednesday it will post an operating loss in the current quarter as recovery in its cell phone business is taking longer than expected, dashing Wall Street expectations for a profit and sending its shares down as much as 14 percent.
The miss of as much as 16 cents per share for Motorola's first quarter outlook overshadowed its fourth quarter results, which were in line with expectations.
"The figures had us scratching our heads checking the date to see if we were looking at an earnings release from 2002," JPMorgan analyst Ehud Gelblum said in a note to clients.
Motorola's outlook suggested the company "either expects massive additional (market) share loss in the first quarter or even weaker margins across the board," he said.
Shares fell to $10.55 in pre-market trading, after falling 7 percent to $12.32 on Tuesday. If the stock stays at that level after trade opens on the New York Stock Exchange, it would be its lowest since October 2003.
The company forecast a first quarter loss per share from continuing operations of 5 cents to 7 cents, before any reorganization charges. Analysts had expected a profit of 9 cents per share, according to Reuters Estimates.
Avian Securities analyst Tero Kuittinen said the outlook reflected Motorola's lack of a strong enough product line to beat rivals, such as Nokia and Samsung Electronics to which Motorola has been losing market share.
"People assumed there's some progress toward profitability in handsets," he said. "People were expecting a linear improvement, so obviously the level of competition has increased."
Motorola plans to focus on cutting costs and getting mobile devices back to profitability. The division posted an operating loss of $388 million in the fourth quarter, compared with a profit of $341 million a year ago. Mobile phone sales fell 38 percent to $4.8 billion, with 40.9 million units sold.
"We are focused on aggressively rationalizing the company's cost structure and working to get Mobile Devices back on track," Chief Executive Greg Brown said in a statement. "The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done."
Brown, formerly chief operating officer, became CEO on Jan. 1 after Ed Zander stepped down amid criticism of Motorola's phone line up and its lack of a popular successor to the once-lauded Razr phone.
Motorola said fourth-quarter profit was $100 million, or 4 cents per share, compared with $623 million, or 25 cents a share, a year earlier. Revenue fell 18 percent to $9.65 billion.
Excluding such charges as a legal settlement, Motorola earnings were 14 cents per share for the fourth quarter, compared with analyst expectations for earnings of 13 cents a share, according to Reuters Estimates.
Motorola shares have fallen about 53 percent since October 2006.