Well, there was big news from Motorola (MOT) Wednesday afternoon, but it had nothing to do with Palm (PALM). The company sharply reduced its first quarter guidance, due to lower than expected sales and operating earnings in the mobile devices division. The company now sees revenue for the quarter of $9.2 billion to $9.3 billion; previously, it had projected $10.4 billion to $10.6 billion. The Street consensus was $10.46 billion.
The company also said it now sees a GAAP loss of 7-9 cents a share for the quarter, including 9 cents a share in charges connected with acquisitions and in-process R&D expenses. The Street consensus has been for a profit of 17 cents a share. The company said the mobile devices division will report an operating loss for the quarter, with “a gradual recovery in the second half,” with a profit for the full year.
For the full year, Motorola says sales, profits and operating cash flow will be “substantially below prior guidance.” The Street has been expecting $46.1 billion in revenue and profits of $1.05 a share. The company says it does expect to be profitable and to have positive cash flow for the year.
Meanwhile, the company announced that it had named Thomas J. Meredith as interim CFO, replacing the retiring David Devonshire. Meredith is a Motorola director, and a partner in investment firm Meritage Capital. It also said that Greg Brown has been named president and chief operating officer. Brown had been president of the company’s networks and enterprise business. (Which by the way had nothing to do with the miss announced yesterday.)
Also, Motorola said it would accelerate a current $2 billion stock repurchase plan, and increase the plan to $7.5 billion.
In the conference call following, what was not discussed was actually more interesting than what was.
CEO Ed Zander ran the call, so apparently he is not going anywhere. Rumors that the company is going to be acquired or go private now appear to be false. Or at least, nothing happened along those lines yesterday. The word “Palm” never came up. No one even asked them about the rumors.
As for the cancellation of his planned keynote at the CTIA Wireless show, Zander says he had a conflict involving his family, and declined to provide any specifics.
More substantively, Zander said that the second quarter would also be “difficult.” The company cited several issues in its mobile device business, including too few 3G phones in Europe; aggressive pricing in emerging markets by rivals; and an unwillingness to match some price cuts in those markets, resulting in the loss of share. The company said there were no inventory writedowns included in its new guidance.
One oddity is that the acting CFO Tom Meredith had spent 8 years as CFO at Dell; recall that Ron Garriques, the former head of the Motorola cell phone business, recently left the company to run Dell’s consumer business. I’m not saying it means anything, I’m just saying its kind of odd.
Motorola said it will provide more details on its outlook when it reports earnings April 18.
Today, either Palm gets acquired, or Palm gets clobbered.
Seriously, if you were working at Palm, would you want to be bought by this company right now?