Motorola Forecast Beats Estimates on Cost Reductions
Motorola Inc. predicted fourth- quarter profit that may exceed analysts’ estimates after job cuts helped the biggest U.S. mobile-phone maker beat projections for the previous period. The stock jumped as much as 10 percent.
Profit, excluding some costs, will be 7 cents to 9 cents a share, Schaumburg, Illinois-based Motorola said today in a statement. Analysts in a Bloomberg survey projected 6 cents. Third-quarter profit on that basis was 2 cents a share, exceeding the average prediction for a breakeven quarter.
Motorola has eliminated at least 8,000 jobs since December and shuffled executives after posting losses of more than $4 billion over the past two years. The company aims to recover market share lost to Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry by introducing phones that run Google Inc.’s Android software, including the Droid and the Cliq.
“They have been very effective in cost cutting and the Droid really is the best device Motorola has come up with since 2005,” said Tero Kuittinen, an analyst at MKM Partners LP in Greenwich, Connecticut, with a “sell” rating on the stock.
Motorola rose 71 cents, or 8.9 percent, to $8.67 at 9:49 a.m. on the New York Stock Exchange, after reaching $8.76. Before today, the stock had climbed 80 percent this year.
Droid, Cliq
Net income was $12 million, or 1 cent a share, after a loss of $397 million, or 18 cents, a year earlier. Job cuts helped Motorola reduce production costs by 36 percent to $3.65 billion.
Revenue dropped 27 percent to $5.45 billion. Analysts predicted $5.54 billion on average.
The company also named Edward Fitzpatrick chief financial officer, effective immediately. Fitzpatrick, 43, had been Motorola’s acting CFO since February.
Motorola’s share of the global mobile-phone market dropped by almost half in the second quarter to 5.6 percent, according to Stamford, Connecticut-based research firm Gartner Inc. Apple and RIM gained, helped by increasing demand for phones that surf the Web, send e-mail and shoot video.
Revenue at Motorola’s mobile-phone business fell 46 percent to $1.69 billion in the third quarter, as shipments plunged by almost half to 13.6 million handsets. The division’s operating loss narrowed to $183 million from $840 million.
Yesterday, Motorola introduced its second phone based on the Android software, the Droid, after unveiling the Cliq last month. Both cost about $200 on a two-year contract and go on sale in November for the holiday shopping season.
Networks, Set-Top Boxes
The Droid features a larger screen than the iPhone and allows users to run multiple applications at once. The device gets Motorola back in the market for high-end phones, from which it has been missing, co-Chief Executive Officer Sanjay Jha, who runs the mobile-phone unit, said in an interview this week.
“This is a rebuilt company, with new leadership and a new platform,” said Matt Thornton, an analyst at Avian Securities LLC in Boston. “If these guys are successful in making the transition to be a smart-phone player, the next four to six quarters could show some marked improvement.” Thornton has a “positive” rating on the stock.
Motorola’s smart-phone sales will be a “significant driver” of its financial performance next year and the majority of phones introduced in 2010 will be Android devices, Jha said on a conference call with analysts today.
“I will be surprised if we don’t break even in at least one quarter in 2010,” he said, referring to the mobile-phone unit.
Motorola’s other units are run by co-CEO Greg Brown. Profit at the home-entertainment unit, which builds television set-top boxes, fell 24 percent to $199 million as sales fell 15 percent to $2.01 billion.
The enterprise mobility unit, which sells bar-code scanners to retailers and supplies emergency and police departments with walkie-talkies, reported a 24 percent drop in profit to $306 million, as sales fell 13 percent to $1.77 billion.
source
Profit, excluding some costs, will be 7 cents to 9 cents a share, Schaumburg, Illinois-based Motorola said today in a statement. Analysts in a Bloomberg survey projected 6 cents. Third-quarter profit on that basis was 2 cents a share, exceeding the average prediction for a breakeven quarter.
Motorola has eliminated at least 8,000 jobs since December and shuffled executives after posting losses of more than $4 billion over the past two years. The company aims to recover market share lost to Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerry by introducing phones that run Google Inc.’s Android software, including the Droid and the Cliq.
“They have been very effective in cost cutting and the Droid really is the best device Motorola has come up with since 2005,” said Tero Kuittinen, an analyst at MKM Partners LP in Greenwich, Connecticut, with a “sell” rating on the stock.
Motorola rose 71 cents, or 8.9 percent, to $8.67 at 9:49 a.m. on the New York Stock Exchange, after reaching $8.76. Before today, the stock had climbed 80 percent this year.
Droid, Cliq
Net income was $12 million, or 1 cent a share, after a loss of $397 million, or 18 cents, a year earlier. Job cuts helped Motorola reduce production costs by 36 percent to $3.65 billion.
Revenue dropped 27 percent to $5.45 billion. Analysts predicted $5.54 billion on average.
The company also named Edward Fitzpatrick chief financial officer, effective immediately. Fitzpatrick, 43, had been Motorola’s acting CFO since February.
Motorola’s share of the global mobile-phone market dropped by almost half in the second quarter to 5.6 percent, according to Stamford, Connecticut-based research firm Gartner Inc. Apple and RIM gained, helped by increasing demand for phones that surf the Web, send e-mail and shoot video.
Revenue at Motorola’s mobile-phone business fell 46 percent to $1.69 billion in the third quarter, as shipments plunged by almost half to 13.6 million handsets. The division’s operating loss narrowed to $183 million from $840 million.
Yesterday, Motorola introduced its second phone based on the Android software, the Droid, after unveiling the Cliq last month. Both cost about $200 on a two-year contract and go on sale in November for the holiday shopping season.
Networks, Set-Top Boxes
The Droid features a larger screen than the iPhone and allows users to run multiple applications at once. The device gets Motorola back in the market for high-end phones, from which it has been missing, co-Chief Executive Officer Sanjay Jha, who runs the mobile-phone unit, said in an interview this week.
“This is a rebuilt company, with new leadership and a new platform,” said Matt Thornton, an analyst at Avian Securities LLC in Boston. “If these guys are successful in making the transition to be a smart-phone player, the next four to six quarters could show some marked improvement.” Thornton has a “positive” rating on the stock.
Motorola’s smart-phone sales will be a “significant driver” of its financial performance next year and the majority of phones introduced in 2010 will be Android devices, Jha said on a conference call with analysts today.
“I will be surprised if we don’t break even in at least one quarter in 2010,” he said, referring to the mobile-phone unit.
Motorola’s other units are run by co-CEO Greg Brown. Profit at the home-entertainment unit, which builds television set-top boxes, fell 24 percent to $199 million as sales fell 15 percent to $2.01 billion.
The enterprise mobility unit, which sells bar-code scanners to retailers and supplies emergency and police departments with walkie-talkies, reported a 24 percent drop in profit to $306 million, as sales fell 13 percent to $1.77 billion.
source
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