Motorola's mobile revenue plunges in Q4, Google reports
Google (NASDAQ:GOOG) said Motorola's mobile phone revenue tumbled almost 40 percent from the same quarter a year ago.
The search giant said that Motorola's mobile business generated revenue from hardware and other sources of $1.51 billion, or 11 percent of Google's consolidated revenue in the fourth quarter. That is down 39.6 percent from the $2.5 billion in mobile device revenue Motorola reported in fourth quarter of 2011, when it was still an independent company. Motorola's mobile business also reported an operating loss of $353 million, or 23 percent of the unit's revenue, in the quarter. The operating loss is also wider than the $70 million loss it posted in the year-ago period.
Google completed its $12.5 billion purchase of the company in May 2012, and has since been paring down Motorola's operations. Google announced 4,000 Motorola job cuts in August and has since warned of more.
During the company's earnings conference call, Google CFO Patrick Pichette told analysts that Google does care about Motorola being profitable, "and we are not in the business for losing money with Motorola or even cross subsiding it." He said that Google is still sorting through Motorola's product pipeline and restructuring the business and it will take some time before those changes show up in Motorola's financial results.
"But, we are really 180 days into this journey and we've made a ton of progress, including the sale of the Home business," he said, according to a Seeking Alpha transcript. "And as I mentioned earlier also we are kind of outsourcing our manufacturing and so much more that has been done and the restructurings that you have heard earlier in the late summer and early fall."
In December Google announced the sale of Motorola's Home business to Arris for $2.35 billion. The company noted in a blog post earlier this month that it would be reporting the set-top box unit's financials as "discontinued operations." Google reported consolidated revenue of $14.42 billion for the fourth quarter, but said consolidated revenue would have been $15.24 billion had Motorola Home been included. Google's net income in the fourth quarter was $2.89 billion, compared to $2.71 billion in the fourth quarter of 2011.
There has been speculation that Google is using Motorola to develop a so-called "X phone," an advanced smartphone running its Android operating system. According to the blog Droid Life, the phone will be announced at Google's I/O developer conference in May, sold in the summer through multiple carriers as well as online through Google's Play store and will not be part of Google's Nexus device program.
In December the Wall Street Journal reported that Google was working on the device, citing unnamed sources, but said Google was running into issues related to manufacturing and supply-chain management. At the time, Motorola CEO Dennis Woodside, a former Google top sales executive, declined to discuss products under development but told the Journal that the company is "investing in a team and a technology that will do something quite different than the current approaches."
During the company's earnings conference call Google CEO Larry Page said that he was "excited" about the future of Motorola's business. He said that "the opportunities are endless" for innovation in a multi-screen world.
"Think about your devices, battery life is a huge issue. You shouldn't have to worry about constantly recharging your phone," he said, according to a Seeking Alpha transcript. When you drop your phone, it shouldn't go splat. Everything should be done faster and easier." Those comments are similar to ones Page recently made to Wired about the potential for mobile hardware innovation.
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Article updated Jan. 23 with additional information.