Cell phone business dwindles as economic decline weakens consumers’ appetites  

By Peter Svensson, AP Technology Writer

Schaumburg, IL (AP) — Motorola Inc. posted a massive fourth-quarter loss Tuesday as it recorded charges to reflect the dwindling value of its cell phone business. The maker of telecommunications equipment also suspended its dividend announced the departure of its chief financial officer.

Hammered by a decline in sales, the company also said it expects to undertake cost-cutting measures meant to save $1.5 billion in 2009.

Motorola lost $3.6 billion, or $1.57 per share, in the fourth quarter as it took $1.56 per share in charges for goodwill impairment and an increase in a deferred tax reserves.

Excluding items, the Schaumburg, Ill.-based company lost a penny per share. Analysts polled by Thomson Reuters on average expected Motorola to break even on that basis.

In the same quarter of 2007, Motorola earned $100 million, or 5 cents per share.

Motorola's sales in the fourth quarter were $7.14 billion, down 26 percent from $9.65 billion in the year-ago period.

Motorola gave no reason for the departure of CFO Paul Liska, who was appointed last February. Edward J. Fitzpatrick, senior vice president and corporate controller, will be acting CFO while the company searches for a permanent replacement.

Motorola most recently paid a 5 cent quarterly dividend, for an annual yield of 4.4 percent. It paid out $453 million in dividends last year.

Its stock fell 14 cents, or 3.1 percent, to $4.40 in premarket trading Tuesday after the release of the results.

Motorola sold 19.2 million cell phones in the quarter. That's less than half the number it sold in the fourth quarter of 2007, but the decline was expected. The company said in early January that it expected to post sales of around 19 million units.

The cell phone unit is struggling both with a loss of market share and a decline in the overall market, as the economic decline weakens consumer appetites around the globe.

However, Motorola's non-cell-phone units, which comprise more than half of sales, posted earnings increases. Their products include cable set-top boxes, police radios and cellular network equipment.

Motorola forecasts a loss of 10 cents to 12 cents per share for the current quarter, excluding the cost of its cost-cutting program and other charges. Analysts expect a loss of 6 cents per share.

For the full year 2008, Motorola lost $4.16 billion, or $1.84 per share. Sales were $30.1 billion, down 18 percent from the year before.