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Motorola Sees Handset Profits By 4th Quarter

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



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

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

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