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Motorola Cell Segment Sales Increase 67%

By Jeff Malester -- TWICE, 4/21/2004

Schaumburg, Ill. — In a sales and earnings surge that battered preliminary industry expectations, cellphone maker Motorola turned in its best quarter in years, more than tripling its overall net and posting revenue nearly $2 billion above forecasts.

First quarter sales in the personal communications segment at Motorola, namely handsets, jumped 67 percent, reaching $4.1 billion, up from $2.4 billion in the year-ago period.

Operating earnings in the cellphone segment hit $398 million in the first quarter, compared with $114 million in the same three months last year.

Increased first quarter sales and earnings in the company’s personal communications division, by far Motorola’s largest business segment, were due to the success of new products introduced in the second half of 2003, said the company.

During the first quarter, ended April 3, the segment shipped 25.3 million handsets, a 51 percent increase over the same three months a year ago and an improvement in market share, said Motorola. The segment also announced 24 new handsets, with 24 featuring color displays and 16 offering integrated cameras.

Success in the handset business helped push up consolidated Motorola sales 42 percent in the first quarter, hitting $8.6 billion, compared with $6 billion year-on-year. Net earnings soared to $609 million, from $169 million year-on-year, a leap of 257 percent.

First quarter 2004 earnings include income of $171 million pre-tax relating to gains on sales of investments, income of $52 million pre-tax relating to semiconductor facilities and income of $15 million pre-tax related to business accruals. As previously reported, the first quarter last year included special-item income of $225 million.

As a sweetener to its first quarter success, Motorola expects sales of $8.2 billion and $8.6 billion in the second three months, with revenue coming in at about 40 percent above the sales of the second quarter in 2003.

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