Print

Mail

wiki links

Motorola records second straight profitable quarter

Motorola Inc reported a fourth-quarter profit of US$174 million on Tuesday, as sales rose 3.2 percent. It was the first time in two years the world's No. 2 mobile-telephone maker had net income in consecutive quarters.

Net income was US$0.08 a share, compared with a net loss of US$1.24 billion, or US$0.55, in the year-ago period, said Motorola spokesman Scott Wyman. Sales rose to US$7.55 billion from US$7.31 billion as demand for wireless handsets and chips increased.

Motorola predicted first-quarter profit below analyst forecasts.

Motorola left its sales prediction for this year unchanged at US$27.5 billion, representing a 3 percent rise from last year and the first increase after two years of declines. Some investors have said chief executive Christopher Galvin will have a tough time achieving gains because of new offerings from rivals such as Nokia Oyj and lower spending by cellular and cable companies.

"They did pretty well this quarter," said Jeff Osborne, a wireless analyst at Munder Capital Management, which oversees US$29.8 billion and held 1.97 million Motorola shares as of Sept. 30.

"The biggest discouragement I see from the numbers is the order trends on the [cell-phone] unit are quite weak."

At the mobile-phone business, the company's largest at 44 percent of revenue, Motorola had US$3.29 billion in fourth-quarter sales, up 11 percent, and booked US$2.1 billion in orders. In a statement, Motorola attributed the disparity to more efficient inventory management.

Motorola has cut 50,000 jobs since 2000 to counter slowing demand and six straight quarters of losses that ended last year.

The company may not be able to sustain the gains in phone sales because of more attractive products from Nokia and Samsung Electronics Co and the end of a US rebate on the color-screen T720 model, a top seller in the holiday season, analysts said.

"I look at that handset business and I see a product line that's pretty unimpressive relative to what's coming out of top competitors like Nokia and Samsung," said Sanford C. Bernstein & Co. analyst Paul Sagawa, who rates the stock "market perform" and doesn't personally own shares.

Shares of Schaumburg, Illinois-based Motorola rose US$0.35 to US$9.10 at 6:28pm in extended trading following the report.

They have declined 39 percent in the past year.

The company said first-quarter profit will range from break-even to US$0.02 a share on sales of US$6 billion to US$6.2 billion.

Analysts surveyed by Thomson First Call had predicted profit, excluding certain expenses, of US$0.05 and sales of US$6.08 billion.

Motorola hadn't given a previous first-quarter forecast.
This story has been viewed 1707 times.