• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Motorola Phone Keep Profits on Top Fourth-Quarter Profits Double: 3 Percent Gain in Market Share

Posted on: Monday, 23 January 2006, 21:00 CST

By Anna Marie Kukec Daily Herald Business Writer

Motorola Inc. said Thursday its fourth-quarter profits doubled and sales for its mobile devices soared, inching it closer to the coveted No. 1 position in cellular phones worldwide.

The Schaumburg-based company shipped a record 44.7 million handsets during the quarter, up 40 percent compared to a year earlier. That helped Motorola increase its hold on the No. 2 spot with 19 percent global market share.

"Adding 3 percentage points in market share in such a tough area is proof of its strong architecture," said Carmi Levy, senior research analyst of Info-Tech Research Group. "The Razr is what has brought Motorola back to the leading edge."

The Razr and other mobile handsets helped boost Motorola in the fourth quarter to net earnings of $1.2 billion, or 47 cents per share, compared to $647 million, or 28 cents per share, in the same 2004 period.

Excluding special items, such as a settlement with Turkish network operator Telsim Mobil and some tax adjustments, earnings were 35 cents per share.

The quarter's sales were $10.4 billion, up 18 percent, from $8.8 billion although slightly below analysts' estimates of $10.5 billion. Shares dropped nearly 6 percent during after-hours trading to $22.99, down $1.36.

The full year showed record sales of $36.8 billion, compared to $31.3 billion in 2004. Net earnings were $4.5 billion, or $1.82 per share, compared to $1.5 billion, the year before.

"Our balance sheet couldn't be better," Motorola Chief Financial Officer David Devonshire said in an interview.

Motorola ended the year with $10.5 billion in net cash, which could be used to acquire more companies, he said.

"We'll continue to look to fill out our product lines," Devonshire said, adding the company will have a stronger future focus on wireless broadband.

The mobile devices segment, which designs, makes and sells phones and other handsets, had quarterly sales of $6.5 billion, up 30 percent from a year ago.

"The big question is what's next for Motorola to ensure the climb continues? Is it more with Razr or something new?" said independent telecom analyst Jeff Kagan. "The Razr is hot. It is the product that has changed Motorola and put it on a positive track. That is good and bad. They have too much of their success dependent on a single product line. What does it mean for Motorola when the next hot device comes around?"

On a less positive note, the networks segment, headquartered in Arlington Heights, had fourth-quarter sales of $1.5 billion, down 4 percent from a year ago. Its full-year sales were $6.3 billion, up 5 percent.

"We had a significant increase in deferred revenues with some large contracts globally," Devonshire said. "So despite the sales dip, we believe this segment will have good growth in 2006."

Motorola forecast its first quarter sales will be between $9.3 billion and $9.5 billion.

Source: Daily Herald; Arlington Heights, Ill.

More News in this Category