Motorola Inc (MOT.N) reported on Thursday its first quarterly profit in 2007 and gave an outlook that beat Wall Street expectations, in a sign the mobile phone maker has started to turn around its business.
Motorola shares rose as much as 5 percent as investors took heart from the results, even though third-quarter profit still fell 94 percent as the company lost cell phone market share to rivals Nokia (NOK1V.HE) and Samsung Electronics (005930.KS).
Analysts said the report buys some time for Chief Executive Ed Zander, who had been under pressure from activist investor Carl Icahn and other shareholders who wanted him to step down.
RBC analyst Mark Sue said the results were encouraging but noted Motorola has a lot of work to do as competition in mobile devices had intensified in the past year.
"It's stopped getting worse for Motorola," he said. "The handset division is still operating at a loss but the loss is narrowing which suggests the light at the end of the tunnel is getting a little bit brighter. It's about sustainability."
While Motorola lost market share in the Asia Pacific region, including India, it regained its lead in Latin America and kept its lead in North America, executives said.
Motorola has been losing share to leader Nokia and Samsung, which took its number-two ranking in the second quarter. It also faces competition from Apple Inc's (AAPL.O) iPhone.
Third-quarter net profit fell to $60 million, or 3 cents a share, from $968 million, or 39 cents a share, in the year-ago quarter. The profit came after two quarters of losses.
Excluding items such as charges from job cuts, Motorola's profit was 6 cents a share, ahead of the average analyst estimate of 4 cents a share, according to Reuters Estimates.
"Our third quarter can be characterized by one word, progress," Zander said on a conference call. "We also recognize there is a lot more work to be done."
Revenue fell 17 percent to $8.8 billion, in line with the average of analyst estimates, according to Reuters Estimates.
MORE PROFITS EXPECTED
Motorola forecast fourth-quarter earnings per share from continuing operations of 12 cents to 14 cents, excluding any reorganization charges or other items, compared with the average analyst forecast of 11 cents.
The company, criticized for not creating a strong successor to its flagship Razr phone, shipped 37.2 million phones in the quarter, giving it an estimated market share of 13 percent.
Jane Snorek, an analyst at First American Funds, which has Motorola shares among its $68 billion assets managed, said investors would give Zander another year as long as Motorola delivers strong new handsets.
"He has six more months to launch new phones. Nobody's going to kick anybody out before then. Then you'll give the new phones six more months," she said. "If phones get delayed again I would think the CEO would be under pressure."
Motorola's handset business posted an operating loss of $138 million compared with a profit of $843 million a year ago. Mobile phone revenue fell 36 percent to $4.5 billion.
Zander said in an interview mobile demand did not appear to be hurt by U.S. economic concerns so far this quarter. Motorola said the total mobile market tends to grow by a double-digit percentage from the third quarter to the fourth quarter.
Asked by analysts about plans for share buybacks, Motorola Chief Financial Officer Tom Meredith hinted there could be news on this in coming weeks. Motorola has about $4 billion left to spend on its roughly $11 billion buyback plan.
The company has been cutting jobs to lower costs, and ended the quarter with 67,000 employees, down from 72,000 in early 2007.
Motorola said revenue for its set-top box and network equipment unit rose 6 percent from a year ago. Its enterprise business posted a 47 percent revenue increase to $2 billion.
Shares of Motorola, which had lost almost a third of their value in the last 12 months, were up 58 cents at $19.13 in midday trade on the New York Stock Exchange.
Showing posts with label Market. Show all posts
Showing posts with label Market. Show all posts
Thursday, October 25, 2007
Asia, Africa demand lifts cell phone market
Robust demand from emerging markets in Asia and Africa lifted third-quarter sales of all major handset vendors from the previous quarter, with companies expecting another sales boost from holiday shopping ahead.
All handset vendors combined shipped 285 million mobile phones in the July-September quarter, with strong demand in Asia and Africa lifting sales 12 percent from a year ago, research firm Strategy Analytics said on Thursday.
Top cell phone providers said they envisage that the market will grow more than 10 percent in the holiday sales-fuelled fourth quarter, but analysts said component shortages are starting to cap growth.
Strategy Analytics said the shortage could cut sales by around 5 million phones in the quarter and the problem could, to some extent, continue into 2008.
"We understand that at least four of the world's top five vendors currently have component-shortage issues, mostly in LCDs and front-end components," said Strategy Analytics analyst Neil Mawston.
"Our latest channel-checks indicate an easing of supply constraints toward the December-January timeframe," he said.
The main gainer from the robust demand on emerging markets was the world's largest handset maker, Nokia Oyj (NOK1V.HE), which sold more phones than its three closest rivals combined.
The Finnish company has a strong lead in emerging markets including China and India.
With about 8 million new clients signing up for mobile telephony each month in India alone, the world's leading cell phone makers are falling over each other to woo first-time buyers with low-priced handsets.
But Nokia, the clear market leader in the ultra cheap phones, reported superior profit margins when compared to its rivals.
Nokia's profit margin from cell phone business rose to 22.2 percent in the quarter, while Samsung (005930.KS) and Sony Ericsson's (6758.T)(ERICb.ST) were at 12.3 percent and 12.6 percent, respectively.
Motorola (MOT.N) made another loss from handset operations, while the world's number five, LG Electronics (066570.KS), had a profit margin of 8.3 percent.
All handset vendors combined shipped 285 million mobile phones in the July-September quarter, with strong demand in Asia and Africa lifting sales 12 percent from a year ago, research firm Strategy Analytics said on Thursday.
Top cell phone providers said they envisage that the market will grow more than 10 percent in the holiday sales-fuelled fourth quarter, but analysts said component shortages are starting to cap growth.
Strategy Analytics said the shortage could cut sales by around 5 million phones in the quarter and the problem could, to some extent, continue into 2008.
"We understand that at least four of the world's top five vendors currently have component-shortage issues, mostly in LCDs and front-end components," said Strategy Analytics analyst Neil Mawston.
"Our latest channel-checks indicate an easing of supply constraints toward the December-January timeframe," he said.
The main gainer from the robust demand on emerging markets was the world's largest handset maker, Nokia Oyj (NOK1V.HE), which sold more phones than its three closest rivals combined.
The Finnish company has a strong lead in emerging markets including China and India.
With about 8 million new clients signing up for mobile telephony each month in India alone, the world's leading cell phone makers are falling over each other to woo first-time buyers with low-priced handsets.
But Nokia, the clear market leader in the ultra cheap phones, reported superior profit margins when compared to its rivals.
Nokia's profit margin from cell phone business rose to 22.2 percent in the quarter, while Samsung (005930.KS) and Sony Ericsson's (6758.T)(ERICb.ST) were at 12.3 percent and 12.6 percent, respectively.
Motorola (MOT.N) made another loss from handset operations, while the world's number five, LG Electronics (066570.KS), had a profit margin of 8.3 percent.
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