Motorola Device Sales Plummet

its planned separation into two business units

According to the Schaumburg, Ill.-based communications giant, mobile device sales came in at $3.1 billion for the third quarter of 2008, or 25.4 million handsets. Device sales were only down slightly from the second quarter of 2008, when it sold $3.3 billion, or 28.1 million units. But year-over-year, Motorola's device sales slid 31 percent, plunging from $4.5 billion, despite the introduction of several key devices including the Krave ZN4, additions to its MotoRokr line and three 3G handsets.

As a whole, Motorola posted a loss of $397 million in the third quarter, a sharp turnaround from the $4 million in profit it posted in the previous quarter.

In the wake of the poor financial performance, Motorola said it would delay spinning off its mobile devices unit into a separate business until sometime after 2009. The slide is also expected to result in layoffs within the devices unit, along with a plan to significantly reduce the number of mobile device platforms Motorola supports. Going forward, Motorola is expected to have a strong focus on its own P2K platform and Microsoft Windows Mobile along with trumping up its initiatives around the open-source Linux-based Google Android, which made its first public appearance earlier this month on the T-Mobile G1 smartphone.

"While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes under way in mobile devices," said Motorola co-CEO and CEO of the mobile devices division Sanjay Jha. "We have made progress on various elements of the separation plan and will continue to prepare for a potential transaction at the appropriate time frame that serves the best interests of the company and its shareholders."

Jha continued: "As part of our plan to rebuild mobile devices, we have announced significant actions to accelerate the consolidation of our product platforms and refocus our investment and market priorities. These efforts will result in a leaner organization with a more competitive and cost-effective product portfolio."