With earnings glow over, Motorola Mobility shares fall

By Wailin Wong
Posted Jan. 27 at 1:15 p.m.

Shares in Motorola Mobility Holdings were down more than 11 percent, to $30.67, Thursday, a day after strong smart phone launches boosted the handset maker’s results in the fourth quarter.

Bloomberg reported Thursday that the imminent arrival of Apple Inc.’s iPhone at Verizon Wireless had slowed sales at Motorola’s biggest carrier.

To blunt the effect, Bloomberg reported, Chief Executive Officer Sanjay Jha said the company is introducing new phones including the Atrix, trying to sell more handsets through other U.S. carriers and bulk up sales in China and Latin America.

On Wednesday, the Libertyville-based company posted earnings of $80 million in the fourth quarter, or $0.27 per share, reversing a loss of $204 million, or $0.69 per share, in the year-earlier quarter. Net revenues jumped 21 percent to $3.4 billion. The mobile devices business reported earnings of $72 million, turning around a $166 million loss in the fourth quarter of 2009. Net revenues for mobile devices rose 33 percent to $2.4 billion.

The mobile devices segment still posted an operating loss for full-year 2010 of $76 million, though this was narrowed from its 2009 loss of $1.2 billion.

Wednesday’s announcement marked the first time Motorola Mobility released earnings as an independent company, although it had not yet spun off from Motorola Inc. during the fourth quarter. Motorola split into two publicly traded companies in early January, with Mobility focusing on mobile devices and TV set-top boxes. The other company, Motorola Solutions, makes communications equipment and software for government and industrial clients.

Motorola Mobility said it shipped 4.9 million smart phones in the fourth quarter, more than doubling the 2.0 million units it shipped in the year-earlier period. Total handset shipments for the quarter were 11.3 million. The company launched 23 smart phones in 2010, with seven of those released in the fourth quarter. The marked increase in shipments is evidence that Chief Executive Sanjay Jha’s strategy to transform Motorola Mobility into a smart phone company is gaining momentum.

“The improvement in our financial results last year, including profitability in the fourth quarter, is indicative of the progress we have made in delivering innovative smart phones and improving the mobile devices business,” Jha said in a statement.

However, Motorola Mobility warned of a rough first quarter. It said it expects to post a net loss of between $26 million and $62 million in the first quarter, which is traditionally a tough period for mobile phone makers. Jha told the Tribune in a Wednesday interview that the volume of mobile phone shipments tends to fall between 7 percent and 10 percent in the first quarter.

Motorola Mobility also faces a new threat at Verizon Wireless, the carrier where it has enjoyed a big marketing push for its Droid smart phones. Verizon announced earlier this month it will carry Apple’s iPhone.

In an interview with the Tribune, Chief Financial Officer Marc Rothman noted that the first-quarter guidance is consistent with information the company provided in December.

“The operating loss we expect in mobile devices (in the first quarter), offset by the operating profit in home, is the result of both seasonality and the competitive environment at Verizon,” Rothman said.

The home segment, meanwhile, reported operating earnings of $54 million for the fourth quarter, compared with a loss of $30 million a year earlier. Revenues were up a slim 1 percent on the year to $1 billion.

Jha said the company has not yet made a decision on where to locate its headquarters. In addition to its current home of Libertyville, Motorola Mobility is considering San Diego, San Jose, Calif., and Austin, Texas.

“We have not made a decision, but that’s something that over a short period of time we’ll engage with,” said Jha.

When asked whether the recent hike in Illinois corporate tax rates played into his decision-making, Jha said there are “a number of factors we take into account.”


Read more about the topics in this post: , , , ,

Companies in this article


Read more about this company »


Read more about this company »

Motorola Mobility

Read more about this company »

Comments are closed.