01—Abstract
Summary
Summary of the 10-K filed February 26, 2009. Cited figures are marked; the original filing is the authoritative source.
Motorola, Inc. reported a challenging year for fiscal 2008, marked by a significant decline in net sales and a substantial operating loss, largely attributable to its Mobile Devices segment.
The company experienced an 18% year-over-year decrease in net sales, driven primarily by a 36% drop in the Mobile Devices segment. This segment also incurred a significant operating loss of $2.2 billiona due to reduced unit shipments, limited product offerings in key areas like 3G and smartphones, and the impact of the global economic downturn. Conversely, the Home and Networks Mobility segment saw a slight increase in net sales and improved operating earnings, while the Enterprise Mobility Solutions segment reported modest sales growth and higher operating earnings.
Looking ahead, Motorola acknowledged the difficult economic climate and its impact on demand. The company reaffirmed its commitment to separating into two independent, publicly traded companies but indicated that the previously targeted separation timeline would be delayed due to market conditions. Strategic priorities include simplifying product platforms, focusing on key markets for mobile devices, and investing in next-generation technologies across all segments, while also continuing cost-reduction initiatives.
02—Key points
Key Highlights
- Motorola reported a substantial net loss of $4.2 billion in 2008, a significant deterioration from a net loss of $49 million in 2007.
- Net sales for 2008 decreased by 18% to $30.1 billion, primarily due to a 36% decline in the Mobile Devices segment.
- The Mobile Devices segment continued to struggle, with net sales down 36% and an operating loss of $2.2 billion.
- The company estimates its global handset market share declined to approximately 8% in 2008, down from 14% in 2007.
- The Home and Networks Mobility segment showed resilience with a 1% increase in net sales and improved operating earnings of $918 million.
- The Enterprise Mobility Solutions segment delivered solid results, with a 5% increase in net sales and a 23% rise in operating earnings.
- The company recorded significant "Other Charges" of $2.3 billion in 2008, including $1.8 billion in goodwill and other asset impairment charges.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2008, Motorola Solutions, Inc. lost $0.17.
- Revenue$25.11B100.0%
- Cost of revenue−$18.17B72.4%
- Gross profit$6.94B27.6%
- Operating costs−$9.48B37.8%
- Operating income−$2.54B10.1%
- Interest, other & tax−$1.70B6.8%
- Net income−$4.24B16.9%
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 26, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $25.11B$36.62B | −31.4% |
| Cost of Revenue | $18.17B$26.67B | −31.9% |
| Gross Profit | $6.94B$9.95B | −30.3% |
| R&D Expenses | $3.40B$4.43B | −23.3% |
| SG&A Expenses | $3.91B$5.09B | −23.2% |
| Operating Income | -$2.54B-$553.00M | −359.7% |
| Interest Expense | $223.00M— | — |
| Net Income | -$4.24B-$49.00M | −8561.2% |
| EPS (Basic) | $-13.11$-0.02 | −65450.0% |
| EPS (Diluted) | $-13.11$-0.02 | −65450.0% |
| Shares Outstanding (Basic) | 323.60M2.31B | −86.0% |
| Shares Outstanding (Diluted) | 323.60M2.31B | −86.0% |
05—Questions
Frequently Asked Questions
What was Motorola's overall financial performance in 2008?
Motorola experienced a challenging financial year in 2008. Net sales decreased by 18% to $30.1 billion, and the company reported a significant net loss of $4.2 billion, a sharp decline from the previous year. This was largely driven by a substantial downturn in the Mobile Devices segment.
How did the Mobile Devices segment perform?
The Mobile Devices segment faced significant headwinds, with net sales down 36% and an operating loss of $2.2 billion. This was attributed to a 37% decrease in unit shipments, limited product offerings in critical segments like 3G and smartphones, and the broader economic slowdown impacting consumer demand. The company's market share in this segment also continued to decline, estimated at 8% for the full year 2008.
What were the key financial drivers for the Home and Networks Mobility and Enterprise Mobility Solutions segments?
The Home and Networks Mobility segment demonstrated stability, with a 1% increase in net sales and a 29% rise in operating earnings, benefiting from growth in its home business segment. The Enterprise Mobility Solutions segment performed well, with a 5% increase in net sales and a 23% increase in operating earnings, driven by growth in the government and public safety market and a favorable product mix.
What significant charges did Motorola incur in 2008?
Motorola incurred substantial "Other Charges" totaling $2.3 billion. A significant portion of this amount, $1.8 billion, was due to goodwill and other asset impairment charges, reflecting the economic downturn and challenges within certain business units. Other charges included costs related to reorganizations and separation initiatives.
What is the outlook for Motorola's strategic initiatives?
Motorola reiterated its commitment to separating into two independent, publicly traded companies, but acknowledged that the previously targeted timeline would be delayed due to prevailing market conditions and ongoing changes within the Mobile Devices business. The company plans to continue simplifying product platforms, focusing on priority markets, and investing in next-generation technologies while managing its cost structure.
06—Continue