Motorola Slashes Outlook, Replaces CFO
Motorola Inc. replaced its chief financial officer Wednesday in a shake up of top management as it slashed its first-quarter sales forecast, blaming weaker-than-expected revenue from its cell-phone unit.
Still reeling from sales and profit problems that emerged in the fourth quarter, the company said it now expects to report a first-quarter loss because of what Chairman and CEO Ed Zander called an "unacceptable" performance by its mobile device business.
Thomas Meredith, 56, was named acting chief financial officer, effective April 1. He replaces David Devonshire, 61, who will retire from the position. Zander also named Greg Brown, president of the company's networks and enterprise business, to the vacant posts of president and chief operating officer.
The surprise announcement after markets closed reflected even deeper turmoil within the Schaumburg, Ill.-based company just a month after the head of its embattled handset business resigned.
Motorola shares tumbled 5.9 percent to $17.63 in extended-hours trading after closing the New York Stock Exchange session down 8 cents at $18.74. The stock has shed 9 percent this year after a 9 percent decline in 2006.
The world's No. 2 cell-phone maker behind Nokia said it now expects sales for the January-through-March quarter of $9.2 to $9.3 billion, down more than $1 billion from its January forecast of $10.4 billion to $10.6 billion.
It said it expects to report a loss of 7 cents to 9 cents per share, including 9 cents per share in charges. That compares with the 17-cent profit forecast by analysts surveyed by Thomson Financial.
The company said it expects sales, profitability and operating cash flow for the full year to be "substantially" below its prior guidance.
"Performance in our mobile devices business continues to be unacceptable, and we are committed to restoring its profitability," Zander said. "After a further review following the leadership change in our mobile devices business, we now recognize that returning the business to acceptable performance will take more time and greater effort."
Besides reshuffling top management, Motorola said it will buy back more of its lagging stock, accelerating $2 billion of share repurchases and increasing the size of its current share repurchase program to $7.5 billion.