Motorola appears to be making good on its promise to turn itself around. The struggling equipment maker surprised investors today by posting a third quarter profit of $12 million, way up from the $397 million loss it recorded in the third quarter of 2008. However, the company's third quarter sales were $5.45 billion, down from $7.48 billion in third-quarter 2008. Most of the company's profits were based on its aggressive cost cutting.
During its earnings call with investors, Motorola co-CEO Sanjay Jha touted the company's recent debut of two Android smartphones. Jha and other Motorola executives were in New York for the call, following yesterday's introduction of the Motorola Droid, which will be sold exclusively by Verizon Wireless. The company's other Android smartphone, the Cliq, is being offered by T-Mobile USA.
Motorola shipped 13.6 million handsets in third quarter, down from 25.4 million in the year-ago period. Motorola estimated its global market share at 4.7 percent. The division had sales of $1.7 billion, down 46 percent from the third quarter of 2008. The division had an operating loss of $183 million, significantly smaller than the $840 million operating loss in the year-ago quarter. The company's handsets had an average selling price of $124 in the quarter.
Jha, who heads the company's mobile devices division, said Motorola will ship fewer phones in fourth quarter and likely will make fewer feature phones in 2010 as it sees more profitability and growth in the smartphone category. "We expect to have a declining pool of feature phones because of cannibalization of smartphones," Jha said.
Interestingly, Jha added that in 2010 he expects most of the company's smartphones will be launched on the Android platform--but he stopped short of saying that all Motorola smartphones will use Android.
Meanwhile, the company's Home and Networks Mobility segment had sales of $2 billion, down 15 percent from a year ago. Motorola said it has shipped 1 million WiMAX CPE devices.
Investors seemed pleased with the news, sending Motorola's stock up more than 12 percent after the report to around $8.91 per share.
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