Motorola's Q2 profit jumps along with smartphone sales

Motorola (NYSE:MOT) posted a stronger net profit in the second quarter that beat Wall Street expectations, and the company's smartphone shipments rose primarily from its devices running Google's Android platform. The company reiterated plans to separate into two publicly traded companies in the first quarter of 2011.

click here for key stats from moto's second quarterMotorola reported a net profit of $162 million, up from its $26 million profit in the year-ago period. On a company-wide basis, Motorola's sales were $5.4 billion in the quarter, down slightly from the year-ago period.

Motorola's handset unit notched a non-GAAP operating loss of $109 million in the quarter, narrowing on the operating loss of $239 million it recorded in the year-ago quarter. The division rang up sales of $1.7 billion in the quarter, down 6 percent from the second quarter of 2009; 34 percent of Motorola's handset sales were outside of North America. Motorola shipped 8.7 million devices in the quarter, down from 14.8 million in the year-ago quarter. However, Motorola's smartphone shipments rose to 2.7 million, up from 2.3 million in the first quarter of this year.

Motorola co-CEO Sanjay Jha, who will lead Motorola's handset and set-top box units when the firm splits, said during the company's earnings conference call that Motorola's average selling price for handsets increased to $207, up from $192 in the first quarter. Jha said the company now expects to ship more than 20 smartphone models this year. He said Motorola continues to expect to ship 12-14 million smartphone units this year, and reach profitability in handsets by the fourth quarter.

Jha also touched on an issue plaguing Motorola and others this quarter: supply constraints affecting smartphone sales. He said that sales of the Droid X, which launched earlier this month with Verizon Wireless (NYSE:VZ), have exceeded expectations. Verizon has scheduled weekly shipments of the device, and reported earlier this month that the device is either sold out or inventory is very low in some parts of the country.

"We believe that we will catch up with demand sometime throughout the course of this quarter," Jha said, adding that investments in the semiconductor industry for smartphones have been below par, but that Motorola will overcome supply constraints.

"Our shipments are still relatively healthy, it's just that demand is outstripping those supplies, and Verizon has been very understanding of our position," he added.

Motorola co-CEO Greg Brown also touched on the company's $1.2 billion sale of its networks business to Nokia Siemens Networks, which was announced earlier this month. He called NSN the "right partner for our customers and employees." He also said that Motorola won the first phase of a private, public-safety LTE network in the 700 MHz band in the San Francisco area. Brown said that the NSN sale will not affect that network.

Motorola's stock was up slightly in trading this morning on the news, to around $7.77 per share.

For more:
- see this release
- see this Bloomberg article
- see this FierceWireless Q2 earnings page

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