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(CFOZone) By John Goff
Motorola on Thursday announced it recorded a modest profit in the third quarter of 2009 -- only its second quarterly profit since September 2008. The communications company also said acting CFO Edward Fitzpatrick had been given the job on a permanent basis.
The two events were not unrelated. Since Fitzpatrick took over as interim finance chief in February - replacing Paul Liska- he has slashed costs at the struggling electronics manufacturer. The ax-wielding has yielded impressive results, too.
The numbers tell the tale. In the third quarter of 2008, Motorola generated $7.5 billion in revenues, but managed to lose nearly $400 million. This year, revenues plummeted 27 percent in Q3, down to $5.5 billion. Despite that drop in sales, Motorola managed to eke out a $22 million quarterly profit.
The Schaumberg, Illinois-based communications company, which has put off plans to split its operations, had announced it would be cutting 8,000 jobs over the course of 2009. Those announcements came before Fitzpatrick was promoted to acting CFO in February.
But Fitzpatrick apparently found even more places to cut. During a conference call on Thursday, the CFO said the company had lowered its headcount by 9,700 for the year.
All told, those job cuts have helped Motorola slash production costs by $3.7 billion. That's a 36 percent reduction.
Likewise, the company spent $800 million on SG&A during the quarter. In Q3 2008, Motorola's SG&A billion was nearly $1.1 billion. Fitzpatrick has also reined in spending on research and development, lowering the outlay to $768 million in Q3. In Q3 2009, Motorola spent nearly $1 billion on R&D.
What's more, Motorola is now sitting on about $7.2 billion in cash and cash equivalents. That's an increase of $700 million from the second quarter of the year.
In a statement announcing Fitzpatrick's appointment, Motorola co-CEOs Greg Brown and Sanjay Jha noted that "Ed has made numerous contributions, including driving significant cost reduction actions and focusing the company on working capital improvements and cash flow generation."
Fitzpatrick, who has been with Motorola since 2000, previously served as corporate vice president of finance for the company's Home & Networks Mobility business. He was promoted to acting CFO when Liska was given the hook in February, after less than a year on the job. Liska, a former CFO at Sears Roebuck, had replaced Thomas Meredith, the onetime finance chief at Dell.
At the time of Liska's departure, Motorola thanked the CFO for his work at the company. But an SEC filing showed that Liska had been involuntarily terminated for cause.
For his part, Liska sued Motorola for "retaliatory discharge," claiming he was canned for warning the company's board about overly optimistic forecasts put out by the company's Mobile Devices division. Liska claimed Motorola was "intentionally or recklessly, materially misstating its 2009 forecasts and strategic plan." He claims forecasts were "based on inaccurate or unsupportable financial assumptions."
For its part, Motorola claims Liska destroyed evidence that would have helped the company defend itself.
The case is still ongoing.
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