Motorola reports 1Q loss of $181 million

Motorola Inc. slipped to a loss in the first quarter, hurt by disappointing sales of mobile phones, as well as expenses to cover a legal settlement, restructuring efforts and an acquisition.

The telecommunications equipment maker reported Wednesday that it lost $181 million, or 8 cents per share, in the first three months of 2007. That compares with a profit of $686 million, or 27 cents per share, in the same period a year earlier.

The results met the revised expectations set by Motorola last month, when the world's No. 2 cell phone maker forecast a loss between 7 cents and 9 cents per share due to weak revenue in its handset unit.

Overall, first-quarter sales slid to $9.43 billion from $9.61 billion a year ago, coming in ahead of the $9.29 billion expected by Wall Street analysts polled by Thomson Financial. Mobile device sales fell 15 percent to $5.4 billion.

"The performance in our mobile devices business in the first quarter is unacceptable and we are committed to restoring it to an appropriate level of profitability," Chief Executive Ed Zander said in a statement.

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.

The rocky first quarter saw the departures of Motorola's chief financial officer and the head of its 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.

Through his affiliates, Icahn has acquired nearly 3 percent of the company's outstanding shares. Icahn, who is trying to convince shareholders to support his bid during the company's May shareholder meeting, called the company's current slate of directors "passive and reactive" and blamed them for some of the company's problems.

Motorola has said it thinks Icahn is unqualified for the post.

Earlier this year, Motorola said it would cut 3,500 jobs, or about 5 percent of its work force, as tries it to reduce operating costs.

The company said Wednesday that its cost-reduction steps were proceeding on schedule.

Motorola shares rose 14 cents to $18.08 in opening trading Wednesday on the New York Stock Exchange.