Motorola Posts 4th Quarterly Profit

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Schaumburg, Ill. - Motorola posted its fourth consecutive quarterly net and operating profit in its fiscal first quarter on significantly lower losses in its wireless-handset division.

The division reduced its own operating losses for the sixth consecutive quarter.

However, company-wide sales continued to shrink, including handset division sales.

In its fiscal first quarter ending April 3, Motorola posted $68 million in net earnings, compared with a year-ago loss of $228 million. First-quarter sales of $5.04 billion were down 6 percent from the year-ago quarter.

Though handset sales were down 9 percent to $1.64 billion in the quarter, they fell at a slower rate than in recent quarters. In the fiscal fourth quarter, for example, handset sales were down 22 percent, and for all of 2009, they were down 41 percent.

Operating losses in the handset division shrank 65 percent to $192 million, compared with a year-ago operating loss of $545 million. Operating earnings in each of Motorola's other groups - home, enterprise mobility and networks - grew to a combined $273 million to offset the handset division's losses.

The company reiterated its forecast that the handset division will post an operating profit in the fourth quarter of 2010, driven by a greater reliance on higher margin Android smartphones.

Because of Motorola's growing smartphone shipments, the company's average selling price grew to $192 in the quarter from $169, co-CEO Sanjay Jha said.

During the first quarter, Motorola shipped 8.5 million handsets, down from 14.7 million in the year-ago period. First-quarter shipments included 2.3 million smartphones, up sequentially from the fourth quarter's 2 million smartphones. About 65 percent of the company's first-quarter smartphone shipments were to the U.S., Jha said in an investors' conference call.

The company raised the low end of its guidance for full-year smartphone shipments from 11-14 million to 12-14 million despite growing competition. Eight of 20 planned Motorola smartphones to be launched in 2010 have already been announced worldwide, he said.

The company has previously said its overall handset unit shipments will decline in 2010 as it continues to pare its portfolio of feature phones, whose sales and margins are being pressured growing smartphone sales, falling smartphone prices, and growing worldwide sales of basic phones.

Handsets accounted for 32.5 percent of company sales in the quarter and 32 percent in all of 2009.


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