Moto's Handy Quarter
Motorola says that its results are down to the continued strong performance of its RAZR model -- just as it has been for several quarters now -- and good 3G performance. (See Moto Phones in a Profit.)
Motorola's revenue for the quarter was $10.88 billion, up 29 percent over the same period last year, and beating analyst expectations of $10.1 billion. For the third quarter, Motorola says it expects sales between $10.9 billion and $11.1 billion.
Analyst Richard Windsor at Nomura Securities notes, however, that Motorola is not taking share from major rival Nokia Corp. (NYSE: NOK) so much as smaller players in the market. "Some of this share has come from Samsung and LG Electronics both of whom have had a difficult second quarter as well as a continued market share loss by smaller players," he writes.
Nokia, which reported its second quarter results this morning, saw revenue rise 43 percent for its second quarter -- growth that was largely spurred by sales in India and China and other Asian markets.
Prudential Equity Group LLC analyst Inder Singh noted that Motorola also saw sales from Asia: "Growth was strongest in Asia, India, and North America, while Europe saw slower growth."
Motorola also managed to largely maintain average selling price (ASP) on its phones, a metric closely watched by industry commentators. "ASPs declined just 1 percent, less than expected, though we expect steeper declines going forward," says Singh in a research note.
The company is continuing to build a war chest of cash for a potential acquisition. Motorola made $500 million from operations during the quarter, meaning it now has over $10 billion in net cash it could spend, according to Merrill Lynch & Co. Inc.
"We continue to believe the company will look to make selective acquisitions focused on key product areas to round out its video and access businesses," comments Prudential's Singh.
— Dan Jones, Site Editor, Unstrung