Motorola phone business making a loss

...taking longer than expected to turn around

30 January 2008 17:47 GMT / By Katie Scott

Motorola has warned that it is going to post an operating loss in its present quarter because its mobile phone business is still ailing.

The division has been struggling in the face of competition from Nokia and Samsung, and Motorola has now warned that its mobile devices division may not return to profitability in 2008.

According to Reuters, some shareholders have reacted to the news by calling for a break-up of the company, while analyst Ed Snyder from Charter Equity Research told the news agency: "They're flirting with the handset death spiral. They're losing share, which makes them smaller, which makes them less competitive on costs, which makes their phones less compelling, which loses more share".

Motorola chief executive Greg Brown has also predicted a "significant drop" in Q1 phone revenue and said unit sales would fall more than the decline of 10-15% typically seen in first quarters.

Bear Stearns analyst Phil Cusick told Reuters that this meant Motorola's market share would fall to 10.4%.

In the fourth quarter, Motorola shipped 40.9 million phones and had an estimated 12.4% market share. A year ago, it had a market share of about 23%, continues the news agency.

"2008 is going to be a challenging year for us", Brown told Reuters in an interview. "There's no doubt there is a lot of heavy lifting and work to be done and we're determined to go ahead and do it."