Motorola’s Q4 builds on Q3 success

Thu, 01/28/2010 - 7:35am
Brian Santo

Motorola managed another quarterly profit in its recently completed fourth quarter. The company did a nice job building on its modest Q3 success, but on a year-over-year basis, revenues were down in all three divisions – including drops of more than 20 percent each in its Mobile Devices and Home & Network Mobility segments.

Corporate sales in Q4 were down $5.7 billion, down from $7.1 billion in the fourth quarter a year ago. That was still an improvement on Q3 sales, which were $5.4 billion. Motorola reported a profit of $142 million, whereas a year ago it posted a $3.6 billion loss; its Q3 profit was $12 million.

Sales in the Home & Network Mobility unit were down 24 percent from a year ago, $1.96 billion in Q4 ’09 compared with $2.5 billion in Q4 ’08. Quarter to quarter, though, the unit’s sales were just about flat; in Q3 ’09, the company tallied $2 billion in sales.

Home & Network Mobility shipped more “digital entertainment devices” – set-tops, gateways, etc. – in Q4 than in Q3, but also fewer modems. The company also got a boost from growing sales of WiMAX equipment.

Motorola is expecting the upcoming quarter to be soft, with a double-digit dip in revenues, Home & Network Mobility head Greg Brown said in the company’s quarterly call with analysts, according to the transcript provided by Seeking Alpha. Long-term prospects are good, however.

The short-term problems are largely associated with the economy and home-buying trends, Brown explained. “Particularly since it's an 80 percent North American-centric business as it relates to Home, as the economy and consumer spending starts to tick back up and U.S. housing stabilizes, I think that business is fine. I think it's still going to be rugged, and we have limited visibility, and I think that's reflected in the guidance we gave,” he said.

In Mobile Devices, the company increased sales from its third quarter to its fourth, based in part on the popularity of its new Droid phones.

At the same time, Motorola completed its acquisition of SecureMedia. SecureMedia specializes in digital rights management (DRM) and security systems for IP-based video distributed across multiple delivery systems and to multiple devices. Motorola has not revealed terms of the transaction. The company is also in the process of buying BitBand Technologies, which specializes in IPTV on-demand systems.

Motorola has been in business for more than 50 years and calculates it has now shipped more than 100 million digital entertainment devices (that category includes set-tops, but it wasn’t clear what other products Moto may have factored into the total). The company has experienced some significant changes over the decades, among the most notable that it no longer makes TVs; it plans to divide again into one company that makes mobile handsets and another dedicated to content distribution systems.

The company is apparently taking the milestones as an opportunity for some subtle repositioning. The company is now talking about an “Internet Era of Television” – its own tagline for anything-anywhere-anytime, aka time- and place-shifting, aka any number of other things, and said that in response to the trend, its corporate focus will be on three consumer needs: content, community and control.

More Broadband Direct 1/28/10:
•  Time Warner Cable pays dividend, posts Q4 profit
•  Insight picks Harmonic for digital network upgrades
•  Motorola's Q4 builds on Q3 success
•  Vecima deals direct with U.S. MSO
•  Canoe hires Redpath as SVP, general counsel
•  Comcast, NBC: Deal would not hurt competition
•  AT&T to invest heavily in network fixes 
•  Apple answers Google, opens 3G VoIP API 
•  Netflix adds 1.1M customers, Q4 profit up 36%
•  Broadband Briefs for 01/28/10



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