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Heavy competition hits Motorola's bottom line

Slumping phone sales

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Weak handset sales hit Motorola's results in the first quarter, as the mobile manufacturer revealed a loss for the three-month period.

The world's second biggest mobile phone manufacturer just managed to hit analysts' expectations with a loss of $181 million, or $0.08 a share, as increased competition in the market hit home. Excluding one-time items such as acquisitions costs, this translated into $0.02 a share, just meeting analysts' expectations.

In March, Motorola chiefs revised their forecasts and predicted the quarterly loss, forecasting sales in the range of $9.2bn to $9.3bn, down from previous expectations of $10.4bn to $10.6bn.

Motorola's mobile devices division saw a year-on-year slump of 15 percent, achieving revenue of $5.4bn, with the unit posting an operating loss of $231m.

The US-based phone maker shipped just 45.4 million handsets during the quarter, a significant decrease from 65.7 million in the fourth quarter.

Despite the poor quarterly performance the company remained confident that it would post a profit for the full year, and predicted a profit in the second quarter of $0.02 to $0.03 a share, excluding one-off items. This clashes with analysts' expectations of $0.08 per share for the coming quarter. However, the company is counting on a stronger second half.

Motorola is also due to continue its cost-cutting measures, which have already hit its Irish workforce in Cork. In March, the company announced it was slashing 330 positions from its Munster workforce as part of a global plan.

Copyright © 2007, ENN

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