By Scott Moritz, writer
Motorola (MOT) will provide yet another glimpse at the continuing collapse of its phone business when it reports first quarter earnings Thursday morning.
The big tech shop has already outlined some of the dreary details including the removal of an additional 2,600 employees, a plan to jettison the money-losing mobile phone unit in a spin off to shareholders and a search for a handset chief to help stabilize if not rebuild the business.
Analysts and investors will eagerly inspect the first quarter performance looking for signs that the worst of Motorola’s slide is over. Motorola is expected to post a 7 cent a share loss on $7.75 billion in sales, according to analysts’ estimates.
The assumption at work here is that once a giant like Motorola has fallen, it’s only a matter time before it gets to its feet again.
Looking ahead the Wall Street consensus forecast calls for Motorola’s losses to narrow to mere a penny a share as cost cutting efforts take hold.
But some analysts aren’t quite that optimistic. Without any new phones and only its current stale lineup to offer, the company’s downward spiral will likely steepen from here, according to Ed Snyder of Charter Equity Research.
“Expect higher losses on deteriorating performance in phones leading to lower guidance,” Snyder writes in a Motorola preview Wednesday.
The prospect of lower guidance will effectively remove the hopeful element that is betting that the only direction from here is up. In fact, argues Snyder, lacking a slew of popular profitable phones puts Motorola at an even greater risk of having a phone unit that can’t generate enough money to operate as a standalone business.
Last year, Motorola’s handset unit booked an accumulated loss of $1.2 billion as Razr phones stopped selling at the breakneck pace reached in 2006, when it was at the height of fashion.
Heavy competition from No.1 phone maker Nokia (NOK) and more nible manufacturers like Samsung, LG and Sony Ericssson have also helped push Motorola to the No.3 slot with another demotion coming soon.
To be sure, Motorola has been struggling to level off the nose dive in its mobile phone division. Last month the company closed a phone plant in Singapore and extended its total layoff tally to 10,000 workers.
This action could stem the flow of red ink a bit. And, in a best case scenario, the company could announce a new phone platform that would deliver exciting new models to the market in time for the big holiday buying season.
So while some analysts and money managers are hoping for miracles, there is another camp bracing for more Motorola misfortune.
