Motorola Reports a Small Q4 Profit, Held Back by Phone Sales

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Motorola's fourth-quarter sales fell 20 percent year-on-year, but the company still made out a small profit, unhampered by the exceptional charges that plunged it into loss a year ago, it reported Thursday. It expects to make a loss in the first quarter, however.

The company may be regretting its decision to hold on to its mobile devices business segment, which it had previously planned to sell: Device shipments fell 38 percent, and it was the only one of Motorola's major business segments to make an operating loss for the quarter, albeit a smaller one than a year earlier as the company's cost-cutting measures take effect.

Total sales for the quarter slipped to US$5.7 billion from $7.1 billion a year earlier. The company reported net income of $142 million, or $0.06 per share, disappointing analysts who had expected $0.08 per share. A year earlier, the company reported a $3.7 billion net loss, including $1.8 billion in goodwill impairment and other charges, and $2.2 billion in deferred income tax.

For the full year, Motorola reported a net loss of $51 million on sales of $22 billion, down 27 percent from the $30 billion in sales it reported for 2008.

The mobile devices business segment made an operating loss of $132 million in the fourth quarter, an improvement on the year-earlier figure of $595 million. Sales for the segment totalled $1.8 billion, down 22 percent from the $2.35 billion a year earlier.

The launch of two smartphones running Google's Android software was not enough to turn the segment's fortunes around. It shipped just 12 million mobile devices, 2 million of them smartphones, during the quarter, down from 19.2 million a year earlier. Motorola estimates that gave it a 3.7 percent share of the mobile phone market, compared to 6.5 percent a year earlier. The company plans to launch four more Android smartphones in the first quarter.

Enterprise mobility solutions, including radios, mobile computers and wireless LAN devices, generated operating profit of $368 million, down from $466 million a year earlier, on sales of $2 billion, down 12 percent year on year.

The home and networks mobility segment saw the largest decline in sales for the quarter, down 24 percent year on year to $2 billion, while operating profit slipped to $91 million, from $257 million a year earlier. The segment includes digital entertainment devices, fiber-to-the-home optical networking equipment and smart meters for electrical utilities; Motorola has made a number of acquisitions to add new capabilities in video on demand (VOD) and digital rights management (DRM).

For the first quarter of 2010, Motorola expects to make a net loss of between $0.01 and $0.03 per share. The figure includes non-cash amortization of intangibles and stock-based compensation expenses of around $0.04 per share, but excludes other exceptional charges.

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