Motorola Sees Small Profit, Pins Future on Android
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Motorola today surprised the tech industry by posting a small profit for the second quarter amid assurance that plans to release Android smartphones for the holiday season are on track.
The nation's largest phone maker reported net income of $26 million, or $0.1 per share, compared to last year's $4 million profit, which broke even on a per-share basis. Taking into account some one-time items, Motorola (NYSE: MOT) lost $0.01 per share, which is better than the $0.04 loss forecast by Wall Street, according to Thomson Reuters
Motorola itself had predicted it would lose $0.03 to $0.05 per share in Q2, and moving forward, is still cautious, with next quarter's outlook in the range of a $0.01 loss to a $0.01 profit per share.
The rebound after three straight quarters of losses was due largely to cost-cutting measure, as opposed to increased sales, according to the company. As it turned out, Motorola's revenue for Q2 checked in at $5.5 billion, down 31 percent from $8.1 a year ago and a bit shy of the $5.6 billion analysts expected.
Motorola's mobile device sales totaled $1.8 billion in the second quarter, down 45 percent from a year ago. It shipped 14.8 million handsets, a modest jump from the 17.7 in the first quarter, but still significantly down from the 28 million it sold a year earlier. The company also reported a 5.5 percent global market share.
Motorola also reiterated its expectation to rely heavily on future releases of Android-based handsets, which it's counting on to resuscitate anemic sales and market share.
"We have agreements in place with carriers and remain on track to bring our new smartphone devices to market for the holiday selling season," Sanjay Jha, Motorola's co-CEO and CEO of its mobile devices business, said in a statement. "We are also excited about our 2010 portfolio and are pleased with the customer feedback. In Mobile Devices, we improved the operating loss, reflecting a lower cost structure, and substantially reduced cash consumption as compared to the first quarter."
Jha also said that Motorola's handsets -- based on the Google-backed, open source Android software -- will be differentiated by combining key Internet, messaging and social networking functions in an intuitive interface.
"[Android launches] will get us back in the game in smartphones," Jha said during the earnings call conference.
The mobile chief also highlighted the working relationship between Motorola and the Android developer community, with the handset maker planning an Android conference in October.
"We expect the ecosystem to continue to gain consumer traction," Jha said.
The plans around Android mark Motorola's effort to leap back into smartphone market in earnest, having failed failing to release signature products in the category, and having lacked a hit since the Razr debuted several years ago.
During that time, rivals Research In Motion (NASDAQ: RIMM) has come to dominate the enterprise landscape with its BlackBerry lineup, while Apple (NASDAQ: AAPL) has soared to popularity in the consumer mobile market with its lucrative iPhone series.
Motorola, however, isn't the only handset manufacturer vying for a new place in the market. Palm (NASDAQ: PALM), for instance, is also trying to make a comeback on the strength of its Pre smartphone and its webOS software ecosystem. While it's not clear how well the Pre is paying off for Palm and Sprint, its exclusive carrier in the U.S., much of Palm's future as a viable company depends on the success of the Pre and webOS.
But RIM, Apple, and a comeback-seeking Palm aren't the only contenders Motorola faces. Samsung, HTC and Acer all have plans to issue Android handsets by the end of the year. HTC with T-Mobile just released the second Android smartphone, myTouch, the follow-up to the T-Mobile G1.