Motorola Troubles Continue

Stocks cited here consist of Motorola (MOT), Research in Motion (RIMM), Apple (AAPL) and Nokia (NOK).

Motorola (MOT) announced 4th quarter and full-year 2008 results this morning with disappointing results. Handset sales for the quarter registered 19.2 million units, down 53% year-over-year from 40.9 million units for the same reporting period last year. All business segments, except Enterprise Mobility Solutions, experienced precipitous declines in revenue.

In addition, the company announced that it will suspend its dividend to shareholders and confirmed its replacement for the CFO position as part of further operational changes. Positive events included improved overall gross margins and continued cash flow generation. Gross margins increased to 29.7% from 26.3% last quarter, primarily a result of product mix towards higher margin network solution platforms and reduced handset sales.

Cash flow generated in the quarter was $201 million. The company continues to reduce headcount and appears to remain determined in improving its cellular handset business, a strategic redirection from last year when the company announced plans to divest this business.

We are not convinced that shareholders will benefit significantly over the next 3 to 6 months without a major restructuring initiative based on economic headwinds, lower overall worldwide demand for handsets, lack of high-end competitive PDA wireless devices — compared to offerings by Research in Motion (RIMM), Apple (AAPL) and Nokia (NOK) — and reduced visibility of near-term revenue improvements.

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