Moto keeps the bad news coming in third quarter

Motorola’s tendency to report bad news continued Thursday, as the company’s third quarter results wiped out the little ray of sunshine earned by a surprise second quarter profit.

Net loss for the third quarter plummeted to $397m, compared to a profit of $60m in the same period last year and completely blotting out the hope offered by the $4m earned in the second quarter of this year.

Net sales slumped to $7.48bn, from to $8.8bn last year, also negating a little rally in the previous quarter.

Predictably the Mobile Devices segment was the albatross around co-CEO and handset chief Sanjay Jha’s neck, with a whopping operating loss of $840m, compared to a loss of $248m a year ago. Handset sales were also down 31 per cent to $3.1bn.

The company shipped 25.4 million handsets, a far cry from the 37.2 million shifted in the third quarter of 2007, but Jha has a plan to fix this. The good news is that Moto will consolidate its handset platforms and revise its portfolio. The bad news is the organisation will be even leaner, which probably means more job cuts.

There won’t be much more information around until after the result presentation later Thursday afternoon, but it seems likely that Moto is willing to bet its increasingly small farm on Android. The company already has a long heritage of Linux in its handset portfolio, last year’s MotoMAGX initiative, which has gone strangely quiet, paved the way for over 60 per cent of the company’s devices to be based on Linux.

Telecoms.com has already revealed that Moto is scouting out Android engineers, so going the open source Linux route and further reducing development costs may make commercial sense.

Meanwhile, the rest of the company had happier news to report. Home and Networks Mobility segment sales were $2.4bn, down just 1 per cent year on year, while operating earnings increased 65 per cent to $263m.

Enterprise Mobility Solutions segment sales were up 4 per cent to $2bn, with operating earnings up 23 per cent to $403m.

The initiatives to be announced Thursday are expected to result in estimated annual savings of $800m in 2009, but the company has also shifted its target of breaking the company up to later than the third quarter of next year, probably because no one wants to buy its handset unit.