Motorola reported a slight third quarter profit and projected better-than-expected fourth quarter earnings. But Motorola's real prospects going forward will depend on how many Android devices it can sell. Sanjay Jha, co-CEO of Motorola, said the company met its commitment to deliver Android devices. Now consumers just have to show up.
In many respects, Motorola's third quarter is anticlimactic (statement). The results---a profit of $12 million, or a penny a share---reversed a loss from a year ago and topped Wall Street estimates for a break-even quarter. Excluding a charge, Motorola had a profit of 2 cents a share. Revenue for the third quarter was $5.45 billion, down from $7.48 billion a year ago.
Meanwhile, Motorola projected fourth quarter earnings between 7 cents a share to 9 cents a share excluding charges. That outlook was better than the 6 cents a share profit Wall Street expected. The company also named Edward Fitzpatrick, acting CFO, as CFO.
Motorola remains a tale of two companies. A broadband and wireless mobility gear unit and the recovering device division.
But given the Droid launch on Wednesday most of the Motorola focus is on new devices. On a conference call with analysts, Jha described the launch of the Droid and Cliq as the first step in revamping Motorola's smartphone lineup. "These devices have what is required in a smartphone today," said Jha, who added that Motorola will continue to closely collaborate with Google and Android developers.
Jha was asked whether Motorola will be prepared to meet demand if Droid is a big hit. Motorola has supply chain and component planning to account for dramatic upside in the company's base demand scenario, said Jha.
"With our devices we'll continue to offer differentiated functionality," said Jha. He said MotoBlur, which integrates social contacts, will be weaved throughout the device lineup. He also added that MotoBlur will be used to solve other consumer problems in the future.
"In 2010 we will launch a variety of new devices," said Jha. Jha added that Motorola's financial performance will largely be driven by demand for its smartphones. He wouldn't be pinned down on the timing of sustainable profits for the device unit and emphasized that Motorola will be focused on evolving the smartphone lineup. "I would be surprised if I don't break even in one quarter in 2010," said Jha.
By the numbers:
- Mobile device sales in the third quarter were $1.7 billion, down 46 percent from a year ago. The unit had an operating loss of $183 million.
- Motorola shipped 13.6 million handsets and had a market share of 4.7 percent.
- The home and networks mobility unit had sales of $2 billion, down 15 percent from a year ago. Operating earnings were $199 million, down from $263 million a year ago.
- Enterprise mobility sales were $1.8 billion, down 13 percent from a year ago. Operating earnings were $306 million, down from $403 million a year ago.