Motorola posts 3rd-quarter profit as mobile division losses ease, names CFOBy AP
Thursday, October 29, 2009
Motorola posts 3Q profit, names CFO
NEW YORK — Motorola Inc. reported an unexpected quarterly profit Thursday as operating losses in its struggling mobile phone division narrowed. The company also forecast stronger-than-anticipated earnings for the current period.
Motorola shares jumped 92 cents, or 11.6 percent, to $8.88 in midday trading.
The results marked Motorola’s second straight quarterly profit after months of heavy losses and shrinking market share in the cell phone business.
Sales continued to fall, but co-CEO Sanjay Jha, hired last year to help reverse the company’s slide, is pinning its turnaround effort on a new slate of new smart phones powered by Google Inc.’s Android operating system. Two of the phones — including a new device called the Droid introduced by Verizon Wireless on Wednesday and another called the Cliq — will be available as the holiday season arrives.
Dovetailing with the release, Motorola offered an upbeat forecast for the quarter ending in December. It expects adjusted earnings of 7 cents to 9 cents per share, while analysts polled by Thomson Reuters expected 6 cents.
In a conference call with analysts, Jha, who heads the mobile division, said he expects an uptick in mobile revenue over the last three months of the year and into 2010. He said sales of more profitable smart phones should drive the improvement, even as the overall volume of shipments is likely to decline.
“Smart phone performance will drive — almost singularly — our financial performance in 2010,” Jha said. He said the mobile division still expects to break even some time next year.
Motorola has been planning for months to split the cell phone business into a separate company from its other units, which make police radios, gear for cable providers and other equipment.
In the most recent quarter, the company earned $12 million, or a penny per share. That compares with a loss of $397 million, or 18 cents per share, in the same quarter a year ago.
Excluding unusual items, Motorola says its adjusted earnings were 2 cents per share. Analysts had expected a break-even quarter, according to a Thomson Reuters poll.
Motorola, based in Schaumburg, Ill., has been trimming its losses through cost cutting, including as many as 8,000 layoffs this year.
Revenue fell 27 percent to $5.4 billion from $7.5 billion a year ago. Analysts were looking for revenue of $5.5 billion. The company shipped 13.6 million phones in the third quarter, compared with 14.8 million in the second.
Motorola also said it has named Edward Fitzpatrick, the company’s acting chief financial officer since February, as permanent CFO. Fitzpatrick, 43, has been with the company since 2000.
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