Motorola posts small 2Q profit, beats expectations

[July 31, 2008]  SCHAUMBURG (AP) -- In a sign that it may be finally turning its fortunes around, Motorola Inc. posted a small surprise profit for its second quarter and shipped more cell phones than in the first quarter.

The Schaumburg-based company said Thursday that it earned $4 million, or less than 1 cent per share, in the three months ended June 30. That includes charges of 2 cents per share.

Analysts polled by Thomson Financial had been expecting a loss of 3 cents per share.

In the same quarter a year ago, Motorola lost $28 million, or 2 cents per share.

Its sales fell 7.4 percent to $8.1 billion versus $8.7 billion a year ago. Analysts had been expecting sales of $7.69 billion.

Motorola shares were up 83 cents, or 11 percent, at $8.50 in pre-market trading.

The company shipped 28.1 million cell phones, up from 27 million in the first quarter, and said it maintained its share of the global handset market.

According to research firm IDC, Motorola's market share actually slipped slightly from 9.4 percent of the global market in the first quarter to 9.2 percent in the second, but the company narrowly maintained its third-place ranking, just above South Korea's LG Electronics Inc.. with 9.1 percent. Nokia Corp. is the largest maker of cell phones, followed by Samsung Electronics Co.

Motorola rode high a few years ago on sales of its Razr phone, but has failed to come up with follow-up of equal popularity. Facing increasing investor discontent, Motorola said in March that it plans to spin the handset business off into a separate publicly traded company. The split should be complete next year.

The cell-phone unit, Motorola's largest by sales, posted an operating loss of $346 million, but the other two units, which together make up more than half the revenue, made up for that loss.

The Home and Network Mobility unit posted an operating profit of $245 million, driven by margin increases and demand from cable operators for more advanced TV set-top boxes and faster cable modems.

The Enterprise Mobility Solutions unit posted $377 million in operating profit, driven by strong international demand for police radios and corporate communications gear.

Motorola also said it expects an operating profit of 6 cents to 8 cents per share for the full year, excluding potential charges for cost-reduction initiatives and other one-time events.

For the third quarter, the company expects to break even or earn up to 2 cents per share on the same basis.

Analysts polled by Thomson Financial had been expecting earnings of 1 cent per share for the full year and for the third quarter.

[Associated Press; By PETER SVENSSON]

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