Motorola reported sales and earnings

April 18, 2006

5 Min Read

SCHAUMBURG, Ill. -- Motorola, Inc. MOT today reported sales and earnings. During the quarter, the company continued to strengthen its balance sheet, generating operating cash flow of approximately $700 million, its 21st consecutive quarter of positive operating cash flow. In addition, the company significantly accelerated its stock repurchase program during the quarter and repurchased approximately 37 million shares of its stock for approximately $815 million.

"We are very pleased about our results, which set a record for first- quarter sales and, excluding the significant items highlighted above, would have also been a record for first-quarter earnings. The company continues to profitably grow revenue and market share," said Ed Zander, chairman and CEO. "Our compelling products and solutions are advancing our vision of seamless mobility. In order to further build on this success, we announced a streamlined corporate structure to improve efficiency and reduce costs as well as an agreement to sell Motorola's automotive business. With a sharpened strategic focus, Motorola is well-positioned for growth and success."

Operating Results

Mobile Devices Segment sales were $6.4 billion, up 45 percent compared with the year-ago quarter. Operating earnings increased to $702 million, compared with operating earnings of $440 million in the year-ago quarter. Motorola's portfolio of market-leading innovations -- "must have" designs that deliver "must do" experiences such as mobile music and mobile video -- is enabling the company's steady momentum in the global marketplace.

  • Shipped 46.1 million units, up 61% compared to the first quarter of 2005 -- and up 3% compared to 44.7 million handsets shipped during Q4 2005.

  • Expanded global market share to an estimated 21%, further narrowing the gap vs. the industry's market share leader. This is up 4.8 points from a year ago and up more than 2 points from Q4 2005 -- with particularly strong year-over-year performance in China, India and Africa.

  • Increased brand strength and market share leadership in the Americas and remained the solid No. 2 with growing brand momentum in Europe, North Asia and the high-growth markets (Middle East, Africa, India and Southeast Asia).

  • Launched six new handsets: 2 for GSM networks, 3 for CDMA and 1 for iDEN.

  • Expanded sales in the candy-bar form factor category with the SLVR L7 and L6.

  • Rejoined the Sprint line-up in North America with the Motorola C290 clamshell, enabling consumers to choose Motorola at all of the region's largest wireless operators.

  • Added new colors and features in the RAZR suite -- including the exclusive Dolce & Gabbana gold edition and music and mega-pixel cameras.

  • Doubled sales versus the prior quarter of the ultra-stylish PEBL U6 clamshell, and introduced an array of fashionable colors for Spring.

Government and Enterprise Mobility Solutions Segment sales were $1.54 billion, up 2 percent compared with the year-ago quarter. Operating earnings increased to $171 million, compared with operating earnings of $167 million in the year-ago quarter. Excluding restructuring charges of $8 million that are included in the 2006 first-quarter results, operating earnings increased 7 percent compared with the year ago quarter.

  • Announced an agreement to sell the company's automotive electronics business to Continental AG for approximately $1 billion in cash. The sale is expected to be completed during the second quarter.

  • Announced a contract for a citywide public safety network in New York City that will increase capacity on the city's communications channels.

  • Announced significant contracts to deploy mission-critical communications systems in the State of Washington to enhance and improve public transit operations.

  • Announced a contract to provide mission-critical communications for the military police in the State of Sao Paulo, Brazil for daily state-wide policing activities.

  • Completed the final phase of an Internet Protocol (IP) TETRA-based digital communications system for the Hong Kong police.

Networks Segment sales were $1.43 billion, down 14 percent compared with the year-ago quarter. Operating earnings were $132 million, down compared with operating earnings of $234 million in the year-ago quarter, due to the decrease in sales and restructuring charges of $21 million in the first quarter of 2006. The segment continued to deliver a comprehensive value proposition in access, core, platforms and services for wireless and wireline carriers.

  • MOTOwi4(TM) Canopy (R) products will be used by Earthlink and Google to provide the metro WiFi wireless network for the city of San Francisco. Motorola will also provide deployment, system integration and support services.

  • Received an order from Rajasthan, India to deploy MOTOwi4 Canopy products for the first Indian statewide wireless broadband grid. Motorola will provide voice, video and data to connect up to 10,000 village councils and address underserved markets.

  • Won push-to-talk over cellular (PoC) contracts with Vodaphone Spain and Yemen Public Telecommunications Corporation, bringing Motorola PoC deployments and contracts to 52 in 38 countries and territories.

  • Signed a contract to provide IP converged core network solutions to vistream GmbH (Germany), which will enable rapid delivery of mobile services to mobile virtual network operators.

  • Announced 3G High Speed Indoor Access Point (Motorola AXPT) for deployment on any UMTS network - and supports existing UMTS and HSDPA devices.

  • Advanced mobile commerce with the announcement of M-Wallet, an application that goes beyond point of sale capabilities to enable online bill payment and mobile banking, money transfers, stored value cards, ticket purchasing and more.

  • Signed a 5-year access network deal with MTC Namibia encompassing GSM, GPRS, EDGE and Canopy solutions to enable service delivery through a hybrid cellular and wireless broadband technology network

Connected Home Solutions Segment sales were $710 million, up 7 percent compared with the year-ago quarter. Operating earnings were $15 million, compared with operating earnings of $19 million in the year-ago quarter. Excluding restructuring charges of $43 million that are included in the 2006 first quarter results, operating earnings increased 205 percent compared with the year ago quarter. Motorola continued to see strength in shipments of video, voice and data infrastructure and consumer premise solutions, further driving our market leadership.

Motorola Inc. (NYSE: MOT)

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