Motorola Posts Profit
Despite Handset Losses
By Joseph Palenchar -- TWICE, 7/31/2008
Schaumburg, Ill. — Motorola reversed a string of quarterly losses by posting a $4 million in net earnings in its fiscal second quarter.
Motorola posted a profit despite a 7.4 percent decline in net sales to $8.08 billion, continuing operating losses in its cellular handset segment, and declining handset dollar volume.
Second-quarter net earnings of $4 million contrast with a $194 million net-earnings loss during the year-ago quarter. Second-quarter operating losses of $5 million compare with a $269 million loss during the year-ago quarter.
For the six months ending June 28, company sales fell 15 percent from the year-ago period to $15.5 billion, and although operating losses were halved during the half to $264 million, the company’s net loss changed little, falling to $190 million from the year-ago $209 million.
For the quarter, cellular handset sales fell 22 percent from the year-ago quarter to $3.3 billion, but the company said it maintained its global handset share in units by shipping 28.1 million units. Handset sales for the half fell 31 percent to $6.63 billion from the year-ago $9.68 billion.
Handset operating losses for the quarter grew slightly to $346 million from the year-ago $332 loss, but handset operating losses were way up for the half, growing to $764 million from a year-earlier $565 million loss.
Handsets accounted for 41.3 percent of total dollar volume in the second quarter compared with the year-ago 48.9 percent. For the first half, handset sales accounted for 42.7 percent of dollar volume, down from the year-ago 53.3 percent.
In Motorola’s other two business segments, sales and operating earnings were up for the quarter and half.
In the home and networks mobility segment, sales grew 7 percent to $2.74 billion for the quarter and 4 percent for the half to $5.12 billion. Operating earnings grew for the quarter by 28.3 percent to $245 million and for the half by 11.2 percent to $398 million.
In enterprise mobility solutions, sales grew 6 percent to $2.04 billion for the quarter and 6 percent to $3.85 billion for the half. Operating earnings grew in the quarter by 24.4 percent to $377 million and by 44.5 percent for the half to $627 million.
The two business segments include wireless broadband networks for enterprises, government and public safety customers worldwide; end-to-end digital and IP video solutions; cellular and high-speed broadband network infrastructure; cable set-top receivers; and customer premises equipment for residential and commercial wireless-network access.
Supporting Motorola’s contention that the company maintained its second-quarter handset share, Strategy Analytics said Motorola maintained its third-place share of worldwide unit sales, fending off an upset by LG.
Strategy Analytics director Neil Mawston said Motorola’s handset shipments in Q2 “exceeded expectations” and pointed out that Motorola’s decline in shipments was its slowest since the first quarter of 2007. “These represent tentative signs of recovery,” he said. “Therefore if Motorola can slash costs and refresh its handset portfolio over the coming months, then a return to profitability in 2009 is possible.”
Strategy Analytics said global handset shipments grew a 15 percent year-over-year in the second quarter to 297 million units.
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