Motorola Cell Segment Sales Increase 67% - Twice

Motorola Cell Segment Sales Increase 67%

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Schaumburg, Ill. — Success of Motorola’s new handsets lineup pole-vaulted the company’s second-quarter personal communications segment sales by 67 percent, climbing to $3.9 billion from $2.3 billion in the year-ago period.

The handset segment, Motorola’s largest, shipped 24.1 million mobile phones in the second quarter, ended July 3, a 52 percent jump from the same three months in 2003. The segment began shipping 17 new handsets, with 15 featuring color displays and seven offering integrated cameras.

Operating earnings for the cellphone segment in the second quarter reached $394 million, compared with $91 million year-over-year.

For the six months, sales in Motorola’s personal communications segment also jumped 67 percent, rising to nearly $8 billion, up from $4.8 billion in the same period a year ago. Second-quarter operating earnings for the segment nearly quadrupled, hitting $792 million, compared with $205 million in the same six months the previous year.

Consolidated sales in the second quarter increased 41 percent, rising to $8.7 billion, compared with $6.2 billion in the same three months in 2003.

However, despite continuing improvements in its handset business, the giant phone maker reported its first consolidated quarterly loss in two years, recording a $203 million deficit, compared with net earnings of $119 million in the second quarter of the previous year. The company’s bottom-line loss in the second quarter was directly affected by an $898 million charge associated with this month’s spin-off of its chip operations.

Consolidated operating earnings were healthy, rising to $845 million in the second quarter, compared with $171 million year-over-year.

For the six months, consolidated sales increased 41 percent, reaching $17.3 billion, up from $12.1 billion in the same period in 2003. Six-month operating earnings rose to $1.7 billion from $301 million, while net earnings came in at $406 million, compared with $288 million in the same six months a year earlier.

Motorola anticipates third quarter sales of between $8.4 billion and $8.8 billion, a 25 percent to 30 percent increase over the third quarter of 2003, and at least a tripling of net earnings, as the company moves into the black for the three months.

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