Moto Posts Profit, Plots Smartphone Recovery

Motorola Inc. (NYSE: MOT) posted a surprise profit in the first quarter of 2010, thanks to networking, business, and home sales. However, the company’s struggling mobile device unit still posted a loss, although the vendor says its smartphone strategy is now starting to show results.

On Thursday, the Schaumburg, Ill.-based vendor said that it had earned a profit of $69 million, or $0.03 per share, for the first quarter of the year, compared to a loss of $261 million for the same quarter last year. Revenue was down 6.1 percent, to $5.04 billion. Analysts surveyed by Thomson Reuters had been expecting a loss of $0.01 a share. (See Motorola Reports Q1.)

The business unit numbers split out like this:

  • Mobile Devices posted revenue of $1.6 billion and an operating loss of $192 million.
  • Enterprise Mobility Solutions posted revenue of $1.7 billion and operating earnings of $141 million.
  • Networks posted revenue of $896 million and operating earnings of $112 million.
  • Home posted revenue of $838 million and operating earnings of $20 million.

The devices unit shipped 8.5 million handsets in total this quarter, with 2.3 million of them being smartphones, which earn bigger margins for Moto. It had said previously that it would sell fewer than 2 million of these higher-end phones. Motorola expects to introduce 20 new phones in 2010 in total and will maintain its heavy focus on the Android operating system. The success of its Droid model is bolstering co-CEO Sanjay Jha’s confidence in the firm’s smartphone position with Android.

"I anticipate that we will continue to get traction with our Droid franchise," Jha said on the call today. "We are guiding 12 to 14 million total units" shipped this year. The company had been suggesting 11 to 14 million for 2010.

"At least on the low-end we have more confidence that we can ship more units this year," Jha commented. The co-CEO reiterated that he expects the device unit to become profitable again in the fourth quarter.

This should be just ahead of the company’s planned split in the first quarter of 2011. Jha will head up the Mobile and Home units of the divided company. Co-CEO Greg Brown will lead the spun-off Networking and Enterprise units. (See Moto Shuffles Ahead of Split .)

”We anticipate filing a form 10 in the summer,” Brown said.

— Dan Jones, Site Editor, Light Reading Mobile

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