Motorola Profits More Than Triple on Sales
Tuesday October 18, 9:43 pm ET
By Dave Carpenter, AP Business Writer
Motorola Says Third-Quarter Earnings More Than Triple to $1.75 Billion on Strong Sales
CHICAGO (AP) -- Motorola Inc., the world's No. 2 maker of mobile phones, said Tuesday its third-quarter earnings more than tripled on record sales as it continued to pick up market share in the global cell-phone market.
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All four of its business units showed profitable growth during the quarter, not counting reorganization costs, and the cell-phone division turned in a whopping 41 percent increase in sales behind the Razr and other phones.
Motorola said net earnings for the July-through-September period were $1.75 billion, or 69 cents per share, compared with $479 million, or 18 cents per share, a year earlier not counting the semiconductor unit which it has since spun off.
Results included gains of 32 cents per share from Motorola's Nextel stock and related hedge adjustments and 13 cents from tax benefits, along with charges totaling 6 cents per share for debt retirement costs and a reorganization of its business units.
Excluding those items, the Schaumburg, Ill.-based company had operating earnings of 30 cents per share -- 2 cents better than the consensus estimate of analysts surveyed by Thomson Financial.
Revenue climbed 26 percent to a record $9.42 billion from $7.5 billion in the third quarter of 2004, also excluding the results of its divested unit Freescale Semiconductor Inc.
Motorola said it increased its cell-phone market share to 19 percent -- up 5.5 percent from a year earlier and about 1 percent from the second quarter of 2005.
The company shipped 38.7 million handsets during the quarter, up 66 percent from a year earlier and a reflection of the slew of new phones it continues to develop.
The high-margin, ultra-thin Razr clamshell phone continued to set the pace with more than 6.5 million units sold in the quarter, and the company also started shipping two new phones from the Razr "family" after the quarter ended in hopes of building on that momentum. The next products from the Razr "family" are the oval PEBL U6 or Pebble, designed to look like jewelry, and the SLVR L7 V8 or Sliver, a non-clamshell version of the Razr.
"We continue to profitably grow market share," CEO Ed Zander said on a conference call. "Our quality of earnings continue to improve quarter over quarter and year over year," he added, referring to a recovery that began two years ago after years of sluggish results.
Motorola remains a distant runner-up to Finland's Nokia, which commands more than 30 percent of the world cell-phone market.
Analyst Mike Walkley of Piper Jaffray & Co. said a survey of store owners found disappointing early sales of another new Motorola product -- the Rokr, which was released last month and comes loaded with iTunes software in a partnership with Apple Computer Inc. Nonetheless, he said, an overall strong portfolio of products and the solid third-quarter results suggest the company can continue its move upward.
"A couple years ago people thought the Chinese and Asian players were going to take over, and really the opposite has happened -- it's really the two big guys (Motorola and Nokia) that have continued to get stronger," he said. "Based on their product portfolio, I expect the trend to continue into next year for Motorola."
Zander acknowledged in response to an analyst's question that the Rokr saw "mixed results" in its North American debut but said the company was pleased with its response in Europe and Asia. "It's just the beginning," he said.
Among Motorola's smaller units, its networks segment had operating earnings of $268 million on 7 percent higher sales, the government unit saw earnings dip to $180 million on 4 percent higher sales and its connected home division had $59 million in earnings on a 28 percent increase in sales.
The company said it expects fourth-quarter earnings of 32 cents to 34 cents per share, in line with analysts' estimate of 33 cents. It forecast revenues of $10.3 billion to $10.5 billion, higher than the Thomson estimate of $10 billion.
Motorola shares closed up 23 cents at $20.17 on the New York Stock Exchange before the report was released and increased 3 percent in after-hours activity. They are up 17 percent this year but down sharply since reaching a four-year high of $23.99 last month. |
