Motorola Announces Revised Guidance for First Quarter and Actions to Improve Profitability and Shareholder Value

Accelerates Repurchase of $2.0 Billion of Common Stock; Increases Existing Share Repurchase Program to $7.5 Billion

SCHAUMBURG, Ill., March 21 /PRNewswire-FirstCall/ -- Motorola, Inc. (NYSE: MOT) today revised its previously announced first quarter 2007 guidance and provided a revised perspective on the full year. The first quarter revision was prompted by lower than anticipated sales and operating earnings at the company's Mobile Devices business. Motorola's Network & Enterprise and Connected Home Solutions businesses continue to perform in line with the company's expectations.

The company also announced a series of actions designed to improve execution, drive profitable growth and enhance shareholder value. Today's announcements include:

    -- Steps to strengthen the performance of the Mobile Devices business
    -- Appointment of Greg Brown to President and Chief Operating Officer,
       effective immediately
    -- Appointment of Thomas J. Meredith to acting Chief Financial Officer,
       effective April 1, and the retirement of David Devonshire
    -- Accelerated repurchase of $2.0 billion of common stock
    -- Increased existing share repurchase program to $7.5 billion

"Performance in our Mobile Devices business continues to be unacceptable, and we are committed to restoring its profitability," said Edward J. Zander, Chairman and Chief Executive Officer of Motorola. "After a further review following the leadership change in our Mobile Devices business, we now recognize that returning the business to acceptable performance will take more time and greater effort."

"The steps we are announcing today will enable Motorola to perform better for our shareholders, customers, partners and employees. I am confident Motorola has the right assets, brand and intellectual property, as well as a strong heritage of innovation and a strong balance sheet -- all of which we will draw upon in the coming months," added Zander.

"Motorola has a proven track record of returning capital to shareholders and we regularly review the company's capital allocation strategy. Today's announcement to accelerate $2.0 billion of share repurchases and increase the size of our current share repurchase program to $7.5 billion demonstrates our ongoing efforts to deliver superior shareholder value," said Zander.

Revised First Quarter 2007 Guidance

Motorola now expects sales for the first quarter of 2007 to be in the range of $9.2 to $9.3 billion. First quarter GAAP results are expected to be

a loss in the range of $0.07 to $0.09 per share, including charges of approximately $0.09 from the items highlighted below.

The estimated loss on a GAAP basis includes acquisition-related charges and in-process R&D expenses associated with the acquisitions of Symbol Technologies, Good Technology and Netopia, totaling approximately $0.06 per share. Also included are business reorganization charges of approximately $0.03 per share related to the previously announced workforce reduction of approximately 3,500. Additional charges for this reduction in force will be recorded in subsequent quarters.

The revised guidance is attributable to lower than anticipated sales and operating earnings in the Mobile Devices business due to lower overall unit volumes, a difficult pricing environment, particularly for low-tier products and a limited 3G product portfolio. The Mobile Devices business expects to report an operating loss for the first quarter of 2007.

The lower volume is due largely to a shift in the Mobile Devices business to focus on long-term gross margin improvement rather than focusing primarily on market share growth. In emerging markets, particularly India, Africa and South Asia, competitors lowered prices at a faster rate than anticipated. Given the renewed focus on gross margin improvement, the company chose not to match prices in all instances. The company noted that the business continues to show strength in the Americas and North Asia.

Motorola's first quarter 2007 results are scheduled to be announced on April 18.

Full Year 2007 Perspective

For the full year 2007, Motorola currently expects overall sales, profitability and operating cash flow to be substantially below prior guidance. The company expects to be profitable for the full year and also to generate positive operating cash flow. The company expects the Mobile Devices business to incur an operating loss in the first quarter, and to experience a gradual recovery in the second half and be profitable for the full year.

The company reaffirmed its previously stated guidance for the Networks & Enterprise and Connected Home Solutions businesses. For the Networks & Enterprise business, Motorola expects mid-teen annual revenue growth and double-digit operating margins. For the Connected Home Solutions business, Motorola expects sales growth to exceed market growth and operating earnings to increase as compared to full year 2006.

Action Steps

Motorola is committed to improving the financial performance of the Mobile Devices business by pursuing market segments and product tiers that demonstrate the best opportunity for high gross margins and meaningful profitability. In this regard, the company is focused on steps to reduce cost and improve consumer experiences, including:

    -- Deploying open standards Linux/Java(TM) software across mid- and high-
       tier devices to enhance the experiences available on handsets
    -- Accelerating a more cost-competitive silicon strategy
    -- Shifting the marketing approach to include experience as well as design
       as a product value proposition
    -- Introducing new feature-rich products that deliver compelling mobile
    -- Simplifying platform and product portfolio while transitioning out of
       legacy platforms
    -- Improving product design processes to achieve competitive price points

The company will continue to make necessary adjustments to its cost structure in line with its revised revenue expectations without compromising key future growth areas such as WiMAX, enterprise mobility and IPTV.

Organizational Changes

Motorola today announced that Greg Brown, President of the company's Networks and Enterprise business has been named President and Chief Operating Officer of Motorola, effective immediately. Brown will be responsible for overseeing Motorola's Mobile Devices, Networks and Enterprise, Connected Home Solutions businesses and supply-chain operations.

In addition, the company announced it has named Thomas J. Meredith as acting Chief Financial Officer, effective April 1, 2007. David Devonshire, Executive Vice President and CFO will retire as CFO, effective April 1, 2007. He will continue with the company to ensure a smooth transition.

Accelerated Share Repurchase and Increasing Existing Share Repurchase

Motorola today accelerated the repurchase of $2.0 billion of common stock under its existing $4.5 billion, 36-month share repurchase program commenced in July 2006. Concurrently, Motorola increased the aggregate size of the share repurchase program to $7.5 billion to be completed over the same time period.

Motorola is committed to returning capital to shareholders, as evidenced by:

    -- The company's first-ever stock repurchase program totaling
       $4.0 billion, which was commenced in May 2005 and completed in only 14
       months in July 2006
    -- The announcement in July 2006 of the immediate commencement of a new
       $4.5 billion, 36-month share repurchase program
    -- As announced today, the accelerated repurchase of $2.0 billion of
       common stock
    -- As announced today, the increase in aggregate size of the current share
       repurchase program to $7.5 billion
    -- The increase of the company's dividend by 25 percent in May 2006.

Upon the completion of the accelerated repurchase program announced today, Motorola will have repurchased a total of approximately $7.0 billion of the $11.5 billion in share repurchases authorized since May 2005.

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