Motorola Mobility (NYSE:MMI) increased its handset, smartphone and tablet sales in the second quarter, but the company ended up with a net loss compared with a profit in the year-ago period.
Motorola shipped 11 million handsets in the quarter, including 4.4 million smartphones, up from 9.3 million handsets and 4.1 million smartphones in the first quarter and up from 8.7 million handsets and 2.7 million smartphones in the second quarter of 2010. The company also shipped 440,000 Xoom tablets in the quarter, up from 250,000 in the first quarter.
The Xoom initially went on sale in the first quarter, and Motorola expanded distribution in China, Europe, Latin America, Japan and South Korea in the second quarter, but even the increased sales pale in comparison to the 9.25 million iPads Apple (NASDAQ:AAPL) sold in the last quarter. Motorola said it expects to sell 1.3 million to 1.5 million tablets for all of 2011.
Despite the increased shipments, Motorola posted a net loss of $56 million in the quarter, down from a net profit of $80 million in the year-ago period. Total revenue clocked in at $3.3 billion, up 28 percent from $2.6 billion in the year-ago quarter. The company's mobile devices unit reported total revenue of $2.4 billion, up 41 percent compared with $1.7 billion in the year-ago period. However, the unit was still in the red, and reported a non-GAAP operating loss of $31 million, narrower than the operating loss of $109 million in the second quarter of 2010.
Motorola's third-quarter and full-year outlook disappointed investors, who sent the company's shares down after the announcement. However, Motorola CEO Sanjya Jha said that while "modest" delays in the company's LTE devices will hurt third-quarter results, he expects the handset business to be profitable in the fourth quarter and for the full-year 2011.
Although the company continues to produce smartphones for Verizon Wireless' (NYSE:VZ) Droid lineup of phones running Google's (NASDAQ:GOOG) Android platform, Motorola has been under increasing pressure to diversify its carrier partners, particularly in the wake of Verizon's launch of Apple's Phone 4 in February. To that end, Motorola announced in June that Sprint Nextel (NYSE:S) will launch at least 10 Motorola smartphones by year-end. The flagship device for that effort, the WiMAX-capable Photon, will go on sale next week.
Motorola's efforts on smartphones have been hampered by delays to the launch of its first LTE devices, including the Droid Bionic smartphone for Verizon. Jha said the Bionic will be available in September, as will an LTE upgrade on the Xoom (though customers will have to ship the tablet to Motorola to get the upgrade). Jha said the devices were delayed because Motorola wanted to use its own LTE baseband chips instead of outsourcing the work.
On the company's earnings conference call, Jha said that Motorola will have at least five LTE devices in the market by the end of the year, including at least one additional LTE smartphone and two additional LTE tablets.
Jha also said Motorola will introduce enhancements to its Webtop application, which enables users to dock their smartphones and get a desktop browsing and file experience. The Motorola chief also said the company's high-end smartphones and suite of smartphone accessories will feature improved capabilities in a number of areas, including office productivity and multimedia. He also said upcoming devices will include more comprehensive security features, device management and enterprise support capabilities.
Special Report: Wireless in the second quarter of 2011
Sprint teams with Motorola to launch 10 smartphones in 2011
Motorola CEO Jha open to software partnership
Motorola's Jha: Software issues drive 70% of smartphone returns
Motorola delays Droid Bionic for Verizon, plans additional features
Motorola ships 250,000 Xoom Android tablets in Q1
Motorola unveils Xoom, Android 'Honeycomb' tablet