Motorola Swings To 3Q Profit; Selects Permanent CFO
October 29 2009 - 7:59AM
Dow Jones News
Motorola Inc. (MOT) swung to a third-quarter profit ahead of the
debut of two key new smartphones aimed at turning around its
momentum.
The Schaumburg, Ill., company also made official Edward
Fitzpatrick's role as chief financial officer, which he filled on
an interim basis since February.
The troubled handset maker has struggled with crafting a
desirable handset, but that appears to be changing after it
unveiled the Cliq for T-Mobile USA and the Droid for Verizon
Wireless. Neither device, however, is yet available, and Wall
Street has largely given the company a pass, preferring to wait and
use their success as a more accurate gauge of future
performance.
For the period, Motorola posted a profit of $12 million, or 1
cent a share, versus a year-earlier loss of $397 million, or 18
cents, based largely on an aggressive series of cost cuts. The
results include 1 cent a share in charges related to cost cuts.
Revenue, meanwhile, fell 28% to $5.45 billion, largely due to
plunging sales of its handset business.
Analysts, on average, expected a break-even quarter and revenue
of $5.54 billion.
Motorola has planned to split the company, separating the
handset business from the networks and equipment unit, which
consists of areas such as network gear, public safety radios and
set-top boxes. The plan was delayed due to the tough economic
environment and the desire to strengthen the embattled cellphone
business.
The wireless segment's sales fell 46% to $1.7 billion as the
company's position further eroded to 4.7% of the global market. In
the second quarter, its share was at 5.5%.
Investors are hopeful of a turnaround. Verizon Wireless, which
is jointly owned by Verizon Communications Inc. (VZ) and Vodafone
Group Plc (VOD), is already heavily promoting its Droid phone,
which was unveiled Wednesday. Deutsche Telekom AG's (DT) T-Mobile
USA is also expected heavily push the Cliq. In the mean time, the
company has relied on low-profile and basic handsets to fill the
gap.
The home and networks business saw sales fall 27% to $2
billion.
The enterprise mobility unit posted a milder decline of 17% to
$1.7 billion. The unit over the past few years has carried the
company's results, but have felt the pressure as governments,
businesses and carriers have cut back on spending.
Motorola expects fourth-quarter earnings from continuing
operations of 7 cents to 9 cents a share. The estimate excludes
charges related to its cost cuts.
Motorola shares rose 5.3% to $8.38 in pre-market trading.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
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