July 31st, 2008
Surprise! Motorola posts profit; Isn't unraveling as handset sales crater
Motorola posted a small profit excluding charges–a small victory, but enough to top Wall Street estimates calling for a loss of 3 cents a share. The company’s enterprise and networking business carried the quarter.
If you’re Motorola you’ll take what you can get. The company reported second quarter earnings of $4 million, or nil a share (statement). However, that earnings tally includes charges of 2 cents a share. Back that charge out and you get Motorola beating estimates by 5 cents a share. Revenue was $8.1 billion in the second quarter.
Meanwhile, Motorola shipped 28.1 million handsets to stay the No. 3 spot in market share. Motorola also said it will report earnings of nil a share to 2 cents a share in the third quarter and earnings excluding charges of 6 cents a share to 8 cents a share.
Motorola, which is planning to split itself up, was fueled by its home and networks division and enterprise systems in the quarter. The home and networks mobility unit had sales of $2.7 billion, up 7 percent from a year ago with operating earnings of $245 million. The division features cable modems and set-top boxes.
The enterprise unit had revenue of $2 billion, up 6 percent from a year ago, with operating earnings of $377 million. The enterprise unite includes mobile networking systems for companies and public safety departments.
The good news: Those two aforementioned units will be together when Motorola splits itself up. The handset division, which will become its own company, still had a tough slog. Sales in the second quarter were $3.3 billion, down 22 percent from a year ago, with an operating loss of $346 million.
These results will inevitably lead to questions about whether Motorola has turned the corner. The short answer: The company hasn’t turned anything around yet, but the second quarter is a small win for Motorola. And once the company ditches the handset unit it’ll look much stronger.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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