Motorola's profit soars on Droid, public safety
Motorola saw its second-quarter profit rise six-fold on strong results from its networks and public safety segments, while its handset division swung to profitability on sales of Android-based smartphones.
The company made $162 million, or 7 cents per share, for the second quarter ended July 3 despite a dip in sales, which fell slightly to $5.41 billion. Last year, the company made $26 million on sales of $5.49 billion.
The positive financial results will help ensure Motorola's separation into two parts goes ahead as planned. The breakup is slated for the first quarter of next year. Motorola's devices and set-top box segments will compose one unit while the company's enterprise mobility segment, whose sales lie primarily in the public safety sector, will compose another unit.
It is essential that Motorola's handset division be able to operate profitably if it is to survive as a stand-alone entity. The division swung to an operating profit of $87 million after last year's $287 million loss despite a 6 percent drop in sales, which slipped to $1.72 billion. Motorola's handset segment is still showing a non-GAAP operating loss of $109 million.
Motorola said it shipped 8.3 million handsets in the fourth quarter, including 2.7 million smartphones. Sanjay Jha, Motorola co-CEO and head of the mobile device unit, maintained the company's full-year estimate for 12 million to 14 million smartphone shipments amid shortages of silicon chips that could restrict sales of the company's hallmark Droid devices. Jha also said the company's new Droid X with Verizon Wireless was "exceeding expectations."
In a conference call with analysts, Jha said the company's handset division will return to sales growth in the third quarter for the first time in nearly four years and will be fully profitable by the fourth quarter. Jha also raised his estimate for the number of smartphone models the company expects to ship this year to "more than 20" from his prior guidance of "at least 20."
Motorola's network business, the majority of which is in the process of being acquired by Nokia Siemens Networks, made $178 million on sales of $967 million. The company's enterprise mobility segment made $181 million on a 10 percent rise in sales, which hit $1.9 billion.