Motorola Mobility pushes past Q2 with strong hopes for Q3

Although Motorola Mobility's third quarter outlook is lower than expectations, it's still plotting for an explosion of releases during the next three months.
Written by Rachel King, Contributor

Although Motorola Mobility's third quarter outlook is lower than expectations, it's still plotting for an explosion of releases during the next three months.

That plan starts with the Photon 4G smartphone with Sprint, which is released this Sunday, July 31. Motorola is banking on that and a slew of other 4G LTE devices set to debut before the year's end to pull the company out of the red.

See also: Motorola Mobility Q2: Decent earnings, 440K Xoom tablets shipped

During the company's quarterly call for investors on Thursday, MMI's chairman and chief executive officer Sanjay Jha outlined Motorola's game plan for a huge second half of the year:

In North America, we will have several smartphones ready for back-to-school season including Photon 4G and TRIUMPH at Sprint and DROID X2 and DROID 3 at Verizon. Regarding the DROID BIONIC, we want to ensure that we deliver an exceptional consumer experience. BIONIC will be the first device to deliver the combination of the power of LTE in a dual-core gigahertz processor and it will be in the stores in September. We also plan to launch a number of new smartphones later in the year including at least one additional LTE device, a refresh of DEFY and several sub $200 smartphones for emerging markets. In tablets, the Android experience continues to improve. An increasing number of tablet applications are available market and the Honeycomb upgrade underway enhances media and video experiences...

...Our upgrade to LTE for XOOM will be available in September followed by two additional LTE tablet introductions later this year. All told, we will have at least five LTE devices in the market by the end of the year.

Speaking of other markets, several analyts predicted that Motorola's earnings are finally on the rise primarily because the mobile device manufacturer has expanded its international presence. Jha confirmed that Motorola is growing rapidly in markets outside the United States, noting that smartphone unit shipments have tripled internationally compared to the same time last year.

We've now launched eight smartphones in China this year with several more devices planned for the second half of the year. Second-quarter smartphone shipments were up sequentially lead by DEFY in the mid-range and XT800 at the high end. We remain one of the top Android smartphone providers in China and in the first six months of the year, we have surpassed our total smartphone unit shipments for all of last year. In Latin America, handset demand continues to be very strong. We continued to grow our business by reentering Chile and Colombia and increasing share in Brazil and Mexico.

Based on all of this, the obvious question that investors asked during the call is why is MMI predicting lower earnings numbers for Q3 than Wall Street wants? It appears Motorola is just being overly cautious, with Jha noting that "we'll see a step up" in earnings - but "not a dramatic increase." After all, Motorola is still looking to break even in GAAP earnings.

On the product side, the Droid Bionic has been delayed considerably. And if it is to be released this fall, investors mentioned that it's likely going to compete to a new iPhone that will be released with both AT&T and Verizon. Nevertheless, Jha insisted that there was a "strong anticipation" for the Bionic.

Also, even though Xoom tablets were much higher than predicted at 440,000 units shipped, we don't know how many were actually sold to end users.


Editorial standards