Motorola Inc. reported a quarterly loss on Wednesday and gave a forecast that raised doubts over when the world's second-biggest mobile phone maker could turn around its business and return to profit.
Excluding special items, Motorola's per-share earnings were a penny above Wall Street expectations, helping push its beaten-down shares up 2 percent. But analysts focused on a weak second-quarter outlook and market share losses to leader Nokia and other rivals.
Goldman Sachs analyst Brantley Thompson said a turnaround could be years away and cited a big risk Motorola would not meet its target for its phone unit to turn a profit this year.
"The ability to regain lost market share and to restore handsets to double-digit profitability is something that's more of a three-year type of plan," Thompson said.
Motorola, which has been hurt by price discounts for basic phones, stiff competition in emerging markets and criticism for a stale phone line-up, also faces a proxy battle with activist investor Carl Icahn, who is seeking a board seat.
Icahn said he has a stake valued at $1.2 billion in Motorola, or nearly 3 percent, and criticized the board for being passive. He said in a letter to investors that difficulties revealed on the earnings conference call reaffirmed his belief the board had "failed to timely steer management in the right direction."
Board member and acting chief financial officer, Thomas Meredith, told Reuters that board support for Chief Executive Ed Zander was "unanimous."
Motorola posted a first-quarter loss of $181 million, or 8 cents a share, compared with a year-earlier profit of $686 million, or 27 cents a share, Reuters reports.
While officials said they anticipate Motorola will be profitable for the full year, analysts were disappointed with the company's outlook.
RBC Capital Markets analyst Mark Sue said that in spite of disciplined pricing, Motorola's recovery could be lengthy.
"The mobile devices situation at Motorola seems fixable but we think it will take at least several quarters," he wrote in a research note. "In the near term, it's got to stop getting worse before it gets better."
The company said it sold 45.5 million handset units and had worldwide market share of about 17.5 percent, down from a high of 22 percent last year.
Motorola had been on a two-year hot streak, thanks to the popularity of its Razr phones, when it aggressively cut prices of Razrs and other high-end phones, especially in emerging markets, to boost market share. Profits dropped steeply.
"Mobile phones units were light, but flat (average selling prices) and a lower than expected loss was encouraging," Tim Long, an analyst at Banc of America Securities, wrote in a research note published Wednesday.
The latest quarter included charges totaling 11 cents per share from a legal settlement, restructuring and an acquisition. The costs were partially offset by a 1-cent gain. Excluding those items, Motorola would have earned 2 cents in the latest period, matching the average analyst estimate.
Motorola's "connected home solutions" unit saw its sales grow 42 percent and its profit climb to $142 million, up from a $4 million dollar loss during the first-quarter period last year.
Networks and enterprise sales grew 20 percent, but that unit earned less than half of what it did a year ago.
The rocky first quarter saw the departures of Motorola's CFO. The head of Motorola's handset unit resigned.
In addition, Motorola has become locked in a proxy fight with billionaire investor Carl C. Icahn, who announced in January that he wants to be elected to one of 13 seats on its board, the AP reports.
Prepared by Alexander Timoshik