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Motorola Posts $162M Q2 Profit

Motorola Inc. (NYSE: MOT) has posted a fiscal second-quarter profit of $162 million, largely thanks to sales at its networks units, even as revenues dipped slightly.

For the April-to-June quarter, the Schaumburg, Ill.-based vendor posted net income of $162 million, or $0.7 per share, up from $26 million, or $0.1 per share, the year before. Excluding special items, Motorola would have earned $0.9 per share, which beat the expectations of those surveyed by Thomson Reuters . Sales for the quarter were down 2 percent year-on-year at $5.4 billion.

The report comes ahead of many changes at Motorola. Last week, the vendor announced that it will sell the majority of its network unit to Nokia Networks for $1.2 billion. The sale is expected to be completed by the end of this year. And in 2011 Motorola plans to spin off its handset unit from the enterprise and public safety operations. (See NSN Expands in North America With Moto Buyout.)

The mobile devices unit sales were $1.7 billion, down 6 percent from a year ago. Operating earnings of $87 million included income from a significant legal settlement of $228 million. Factoring out the legal settlement, the mobile division lost $109 million.

Motorola shipped 2.7 million smartphones in the quarter, compared to 2.3 million in the previous three months. Overall, the company shipped 8.3 million handsets in the quarter.

Mobile devices head and co-CEO Sanjay Jha says the company is looking at a handset turnaround in the rest of the year, despite component supply concerns and the possibility of further macro economic woes. "We feel very confident about profitability in the fourth quarter," Jha said on the earnings conference call.

The new Droid X is now Motorola's flagship phone going into the third quarter. "Droid X has exceeded our exceptations," Jha said, even though supply of the phone is suffering because of component shortages. Jha said the industry as a whole is suffering from issues like semiconductor supply but predicted that the situation will get better.

"We believe we will catch up with demand sometime in this quarter," he said. "Our shipments are still relatively healthy -- we’re just unable to meet demand.

Jha now says that Motorola will ship "meaningfully" more than 20 Android smartphones this year. "I think we’re well placed with multiple carriers to drive sales in the fourth quarter."

Co-CEO Greg Brown, meanwhile, stressed Motorola's LTE efforts as part of the way forward for the other half of the planned spinoff, noting that Motorola was well placed to help move with LTE from a data-focused consumer technology to government and public-safety voice applications over the next few years. "Next-generation public safety... I think this is a seismic change," he said. (See Moto Seeks $50M for LTE Safety Network.)

Brown says Motorola's enterprise business is now "coming out of a trough." He expects growth in its Symbol WLAN security business, RFID, and services like hosted applications.

Motorola’s enterprise mobility business delivered sales of $1.9 billion and operating earnings of $181 million. Network sales were $967 million with operating earnings of $178 million.

— Dan Jones, Site Editor, Light Reading Mobile

joset01 12/5/2012 | 4:28:32 PM
re: Motorola Posts $162M Q2 Profit

Well, if what all the carriers are saying is correct and the next phase of growth comes with adding extra devices or taking subs from other operators that suggests that Apple -- and Moto -- would be well advised to start trying to exploit more different types of devices. Didn't hear any mention of a tablet on the Moto call.

DCITDave 12/5/2012 | 4:28:32 PM
re: Motorola Posts $162M Q2 Profit

Moto sold 30k smartphones a day during the quarter. Apple sold 93k iPhones a day during its last quarter.


Wonder how those numbers will compare in a year?

sarahthomas1011 12/5/2012 | 4:28:32 PM
re: Motorola Posts $162M Q2 Profit

By my count, Motorola is promising 13 more Android devices this year. Is that correct?  That's a big number, but I imagine there will be a big holiday push.

DCITDave 12/5/2012 | 4:28:31 PM
re: Motorola Posts $162M Q2 Profit

That's always been the appeal of Android. More devices to market more quickly. Someone should tell Symbian that. They seem like they could use a plan.

sarahthomas1011 12/5/2012 | 4:28:30 PM
re: Motorola Posts $162M Q2 Profit

I think that's because it's a "secret tablet!" The rumor mill says Moto will have a tablet based on Android 3.0, the forthcoming Gingerbread, before the end of the year and, of course, it will be an iPad killer.

FredStein 12/5/2012 | 4:28:22 PM
re: Motorola Posts $162M Q2 Profit

Quoting the article:


"The mobile devices unit sales were $1.7 billion, down 6 percent from a year ago. Operating earnings of $87 million included income from a significant legal settlement of $228 million. Factoring out the legal settlement, the mobile division lost $109 million."


So - total unit sales are down despite the 2 for the price of one Droid offer. The Droid sales were impressive. Real operating income was negative $109. Partly due to the cost of the 2 for 1 offer no doubt They're selling core networking. What is the sustainable, profitable business for Motorola?


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