Motorola swings to $3.6 bn Q4 loss; suspends dividend
Motorola on Tuesday swung deep into the red for the fourth quarter, even forcing the cell phone maker to suspend dividend.india Updated: Feb 03, 2009 22:42 IST
Motorola on Tuesday swung deep into the red for the fourth quarter, even forcing the cell phone maker to suspend dividend.
Motorola posted a stunning loss of 3.6 billion dollars for the fourth quarter ended December 31, 2008. The entity had a net profit of 100 million dollars in the year-ago period, it said in a statement.
For the fourth quarter, the telecom company's net sales tumbled to 7.1 billion dollars from 9.64 billion dollars in the corresponding period a year ago.
According to the statement, most of the charges incurred in the fourth quarter are "non-cash" and primarily relate to the impairment of goodwill and an increase in deferred tax asset valuation reserves.
Further, Motorola's board of directors has decided to suspend "quarterly cash dividends" on the common stock, effective immediately.
"The Board believes suspending the dividend will further strengthen the company's balance sheet and enhance its financial flexibility," the statement pointed out.
However, for the December quarter, Motorola had generated positive operating cash flow to the tune of 201 million dollars.
"In light of the economic climate and challenges we face, we have implemented aggressive measures to reduce costs and improve financial flexibility, particularly in Mobile Devices.
The cost-reduction actions underway are expected to generate aggregate savings of approximately 1.5 billion dollars in 2009," Motorola's Co-Chief Executive Officers Greg Brown and Sanjay Jha said.
For the full year ended December 31, 2008, Motorola registered a loss of 4.16 billion dollars on sales of 30.14 billion dollars.