Motorola Sees Handset Profits By 4th Quarter

By Joseph Palenchar -- TWICE, 1/28/2010

Schaumburg, Ill. - Motorola posted its third consecutive quarterly net and operating profit in the fourth quarter on significantly lower losses by the company's wireless-handset division, which reduced its own operating losses for the fifth consecutive quarter, the company's financial report shows.

In the fourth quarter of 2010, the handset division will return to profitability, co-CEO Sanjay Jha said.

In the fourth quarter of 2009, the company shipped 12 million phones worldwide, generating $1.82 billion in revenue. A total of 2 million of those phones were smartphones, almost all of which were Android-based, helping drive up average selling prices to $169 from the previous quarter's $124.

In 2010, the company reiterated plans to introduce at least 20 Android-based phones, compared with the two Android phones available in the fourth quarter of 2009. In 2010, the company expects to ship anywhere from 11 million to 14 million Android models to account for 50 percent of overall handset revenues, with Android revenues exceeding 50 percent in 2011, Jha said. One new model shipping in 2010 will be a direct-to-consumer phone sold through Google, Jha said.

Overall handset unit shipments will decline in 2010 as the company continues to reduce its feature-phone portfolio, although it will remain in that market and in low-end voice-centric phones, which will be made through an ODM mainly for emerging markets. Despite lower unit shipments in 2010, the greater reliance on higher margin Android phones will deliver fourth-quarter profitability in the handset division, Jha said.

For the fourth quarter of 2009, handset-division sales were down 22 percent year over year to $1.82 billion, and the division's operating loss shrank to $132 million from a year-ago $595 million loss and sequentially from a third-quarter $183 million loss.

For the full year, handset division revenues were off 41 percent to $7.15 billion, and the full-year handset operating loss was roughly halved to $1.08 billion from the year-ago $2.2 billion loss.

Handset sales accounted for 32 percent of company revenue in 2009.

Company-wide, revenues declined in the fourth quarter by 20 percent year over year to $5.72 billion and fell 27 percent for the full year to $22 billion. Company-wide operating earnings were $163 million in the quarter, compared with a year-ago $1.68 billion operating loss. Full year-losses came to $148 million, down from the year-ago $2.39 billion operating loss.