Motorola Has Profit Surprise and Forecasts More to Come

Motorola Has Profit Surprise and Forecasts More to Come
Copyright By REUTERS
Published: October 29, 2009
http://www.nytimes.com/2009/10/30/technology/companies/30motorola.html?th&emc=th


Motorola has forecast a higher-than-expected profit for the current quarter as it begins to sell two phones based on the Android software by Google in a bid to regain ground lost to the iPhone by Apple.

After surprising Wall Street with a third-quarter profit on Thursday, Motorola forecast fourth-quarter operating earnings of 7 to 9 cents a share, compared with the average analyst estimate of 6 cents.

Analysts were quick to point out that Motorola had yet to prove that its phones could be popular again, but said results so far indicated that Sanjay K. Jha, its co-chief executive, would make sure the company delivered.

Motorola posted a third-quarter profit of $12 million, or 1 cent a share, compared with a loss of $397 million, or 18 cents a share, a year earlier.

Excluding one-time items, the profit was 2 cents a share, compared with the average analyst expectation that it would break even, according to Thomson Reuters.

Motorola’s third-quarter revenue fell 27 percent, to $5.45 billion, compared with Wall Street expectations of $5.54 billion.

The phone unit’s operating loss narrowed to $183 million, from $840 million a year earlier; the loss was $253 million in the second quarter.

Phone shipments fell to 13.6 million in the third quarter, from 25.4 million a year ago.

Mr. Jha, who runs the phone unit, said Motorola would sell fewer phones this quarter as it focused on more expensive smartphones over mass-market, money-losing phones.

The cellphone unit’s operating loss would therefore narrow this quarter, Mr. Jha said in a conference call, adding that the unit would break even for at least one quarter in 2010.

Verizon Wireless, a unit of Verizon Communications and the Vodafone Group, is already advertising the Motorola Droid, which uses the Android operating system, as an alternative to the iPhone.

Verizon will have the Droid in stores on Nov. 6, and T-Mobile USA, a Deutsche Telekom unit, will have the Cliq Android phone from Motorola in stores on Monday.