Motorola surprises, reports profit in Q3
It’s pretty safe to say the wireless industry didn’t see this one coming: Long-struggling Motorola made a profit, its second-quarterly move into the black after months of losses and falling market share.
The handset maker even went so far as to give an optimistic forecast for the next quarter, a prediction that was widely unexpected by analysts.
Despite a marked decline in sales, Motorola improved its profitability and managed to swing to a $12 million profit over last year’s loss of $397 million. Sales fell to $5.45 billion from $7.48 billion last year. Despite this, the company managed to slightly improve its gross margin to about $1.81 billion.
Motorola CEO Sanjay Jha is pinning the company’s turnaround on its historically troubled handset unit, which saw sales plummet 46 percent this quarter to $1.69 billion compared to $3.12 billion last year. However, the unit managed to significantly narrow its losses to just $183 million compared to last year’s staggering $840 million loss.
In a statement, Jha said Motorola would “continue to expand our smartphone portfolio” and called its launch of Android phones “important milestones as we begin to address the mobilization of the Internet and the growing demand for modern smartphones.”
This marks a significant turnaround in Motorola’s outlook for its handset unit. The company had tried for some time to spin off the division, but was unable to find a buyer. The handset business had been hemorrhaging cash and losing market share, but Motorola’s recent earnings statements seem to show that its turnaround efforts appear to be gaining traction.
Motorola shipped 13.6 million phones in the third quarter. Yesterday, the company launched its much-anticipated DROID smartphone with Verizon to widespread acclaim. The Android-based device features turn-by-turn navigation with Google Maps and is the first device to run Android’s updated 2.0 operating system, Eclair.
The company expects to make 7 cents to 9 cents per share next quarter, above the 6 cents per share expected by analysts polled by Reuters.
In addition to its earnings announcement, Motorola made its acting CFO, Edward Fitzpatrick, permanent. Fitzpatrick has been with the company since 2000.