UPDATE: Motorola 1Q Loss Widens On Slumping Sales, Margins

Aggressive cost cuts helped Motorola Inc. (MOT) blunt a widening first-quarter loss on plunging revenue, but the company remained silent on the new line of cellphones intended to spark its turnaround.

The Schaumburg, Ill., company is banking on several phones powered by Google Inc.'s (GOOG) Android mobile operating system. The devices, however, aren't expected until the end of the year, forcing Motorola to cut jobs, scrap several promising products, and suspend its dividend to shore up its balance sheet.

As a result, Motorola said it is ahead of schedule in its cost cuts and raised its full-year cost-savings target by $200 million to $1.7 billion. Its second-quarter loss estimate was narrower than expected.

Motorola posted a first-quarter net loss of $228 million, or 10 cents a share, compared with a loss of $190 million, or 9 cents a share, a year ago when there were fewer shares. Results included a charge of 2 cents a share related to cost cuts. Analysts, on average, forecast a loss of 11 cents a share.

Net sales retreated 28% to $5.37 billion, well below what Wall Street expected.

Interest is peaking on what Motorola has in store for the latter half of the year, but its bid to create an eye-catching device will face competition from the next Apple Inc. (AAPL) iPhone and the Palm Inc. (PALM) Pre. A Strategy Analytics report called for the global handset market to fall 10% in the second quarter, although smartphones are expected to fare better.

Co-Chief Executive Sanjay Jha, however, spurned requests by analysts to provide more detail, staying vague with promises of differentiation and social networking features. He added the devices would address the mid-to-high-tier market and launch with multiple carriers in multiple regions.

"I don't want to tip my hand," he told analysts during a Thursday conference call.

Motorola shares recently fell 4.8% to $5.67.

Motorola shipped 14.7 million handset units in the first quarter, down 23% from the fourth quarter, as it continues to fall from its perch as a top-tier player. Its market share fell to 6%, roughly half of what it held a year ago.

The mobile-devices division posted a wider loss as sales dropped 45%.

Motorola delayed plans to spin the unit off because it can't survive on its own until it stops hemorrhaging cash. Jha said the company still intends to go through with the split, although didn't discuss a timeframe.

What would be the other half fared better but also saw pressure from the weakening economy. The home-networks segment saw sales fall 16% and earnings drop by a quarter, while the enterprise business posted an 11% decline in revenue amid a 38% fall in earnings.

Co-CEO Greg Brown said he expects higher sequential sales from each division, although both would still post year-over-year declines.

Looking ahead, the company projected a second-quarter loss of 3 cents to 5 cents a share. Analysts expected a loss of 5 cents.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; [e-mail]

(Kerry Grace contributed to this story.)