Device operating systems

Moto Hangs in Mobility Limbo

Motorola Mobility LLC 's first earnings report as an independent company weren't bad -- they were nearly in line with analyst estimates.

But they were also indicative of a company in transition -- and clearly in recovery mode -- that's being cautious about a future in a competitive mobile devices market. (See Moto Mobility Posts Q4 and Moto to Split in Two on Jan. 4.)

Overall, revenues were $3.4 billion for the quarter, up 21 percent from last year. Mobile devices made up $2.4 billion of that, up 33 percent year-on-year. The company, focused on mobile devices and set-top boxes, did swing to a profit of $80 million, compared to last year's fourth-quarter loss of $204 million.

Moto shipped just 4.9 million smart phones in the quarter, which was an awkward in-between time for the handset maker. It launched seven new devices, but most were evolutionary. Its Droid line was old news, but its new 4G smart phones and tablets had yet to be announced. (See CES 2011: Hands On With Motorola's Atrix 4G and Motorola Xooms Out Next Month.)

But even with impressive new products on deck, like the Atrix smart phone and Xoom tablet, it won't be easy for Moto to get out of its slump. Its biggest supporter, Verizon Wireless , now has its loyalties split between Android and the iPhone. (See OS Watch: iPhone Steals Moto's Thunder and Verizon's iPhone: Angst for Android.)

Motorola Mobility Chairman and CEO Sanjay Jha told investors Wednesday that they have already seen some slowdown at Verizon as customers anticipate "other devices." That could be Moto's own Android products or, more likely, the iPhone. But, he said, Moto has a meaningful relationship with Verizon and expects it to continue in a strong way.

"I'm not yet convinced Verizon will not continue to push forward with Droid as a franchise," Jha replied to a question about Verizon's iPhone lust. At the same time, Moto is working to disperse its products to rely less heavily on Verizon by looking to other carrier partners, especially AT&T Inc. (NYSE: T).

Jha said that the company would focus on making its technology intuitive and "allowing consumers to connect with the people and things that matter to them, to simplify and enrich peoples' lives." It will also continue to focus on Android in the U.S. and on building tablets with different sizes and price points to appeal to different demographics.

"We will focus on smart phones at the leading edge of technology for consumers and enterprise," Jha added. That tech includes unique services around social collaboration, driven by its MotoBlur interface, content management and delivery, cloud storage and essential enterprise capabilities.

For Europe, Jha said that Moto will continue the strategy it had in 2010. Rather than making a large investment, as some of its competitors are doing, Moto will focus on pushing the limits of its existing European portfolio, at least for the first half of the year. The company expects its operating earnings to be flat in the first quarter of 2011, but is anticipating a net loss of $26 million to $62 million. For the full year, it expects to ship 20 to 23 million smart phones and tablets combined.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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