Motorola posts another tiny quarterly profit, phone division not yet pulling its weight (update)
By Chris Ziegler 
posted April 29th 2010 12:46PM
posted April 29th 2010 12:46PM
Moto's earnings for the first quarter came out today, and they pretty much echo what the company managed to do in the fourth quarter of 2009 -- pull a small profit thanks to performance from the Home, Enterprise Mobility, and Network groups in the face of an operating loss from the Mobile Devices (read: phones) division. Unfortunately, all of the numbers are just a little bit worse across the board; Motorola didn't have any Droid-style blockbuster launches or major gift-giving holidays to help it along this quarter, and ended up dropping $192 million in the hole compared to $132 million in the quarter prior. Co-CEO Sanjay Jha still seems upbeat, though -- and he'd better, considering that he'll lead the spun-off phone division after the breakup -- pointing out that shipments actually increased in the quarter with the release of six new handsets. When you throw all the numbers together, the combined company posted $69 million in earnings, down from $142 million in the fourth quarter; hey, that's still better than a loss, especially considering that it's estimating considerably higher earnings in the current quarter. Follow the break for Motorola's release.Update: Despite the slight profit, poor phone sales may have finally cost Motorola the stateside mobile crown. The Associated Press is reporting that with 8.8 million iPhones sold in Q1, Apple has edged out Motorola as the largest phone maker in the US.
Motorola Announces First-Quarter 2010 Financial Results
April 29, 2010
Financial Highlights
* First-quarter sales of $5.0 billion
* First-quarter GAAP earnings of .03 per share, compared to a loss from continuing operations of .13 per share in first quarter 2009; first-quarter 2010 GAAP earnings include income of .01 per share from highlighted items
* Total cash* of $8.5 billion, a sequential increase of $455 million
* Enterprise Mobility Solutions sales of $1.7 billion; operating earnings of $141 million
* Mobile Devices sales of $1.6 billion; shipped 8.5 million handsets, including 2.3 million smartphones; operating loss of $192 million
* Networks sales of $896 million; operating earnings of $112 million
* Home sales of $838 million; operating earnings of $20 million
Click here to view the financial tables that are an integral part of this release.
Click here to view additional financial information.
SCHAUMBURG, Ill. – April 29, 2010 – Motorola, Inc. (NYSE: MOT) today reported sales of $5.0 billion in the first quarter of 2010. The GAAP earnings in the first quarter of 2010 were $69 million, or .03 per share, which compares to a GAAP loss from continuing operations of $291 million, or .13 per share, in the first quarter of 2009.
First-quarter 2010 GAAP earnings include net income of .01 per share from highlighted items, which are described at the end of the press release. GAAP earnings per share also include non-cash expenses for stock-based compensation and amortization of intangibles totaling .04 per share in the first quarter of 2010. Further details are outlined at the end of this press release.
During the quarter, the Company generated positive operating cash flow of $485 million and ended the quarter with a total cash* position of $8.5 billion.
"We continue to execute on our business strategy, build momentum in smartphones and improve our operating performance. During the quarter, we increased smartphone shipments sequentially and introduced six new devices," said Sanjay Jha, Motorola co-chief executive officer and CEO of Mobile Devices and Home. "We are in a strong position to improve our share in the rapidly growing smartphone market, particularly in light of our competitive portfolio, strengthened brand and improved carrier relationships."
Jha added, "The Mobile Devices and Home businesses are uniquely positioned to capitalize on the convergence of mobile experiences and home entertainment. We remain focused on developing next-generation products to capitalize on the opportunities of this dynamic market."
"Our Enterprise Mobility Solutions and Networks businesses performed very well during the quarter, delivering strong operating earnings and excellent cash generation," said Greg Brown, Motorola co-chief executive officer and CEO of Motorola Solutions. "These businesses continue to deliver best-in-class market leadership and financial returns."
Operating Results
Mobile Devices segment sales were $1.6 billion, down 9 percent compared with the year-ago quarter. The GAAP operating loss was $192 million, a significant improvement compared to the operating loss of $545 million in the year-ago quarter.
Mobile Devices highlights:
* Shipped 8.5 million units, including 2.3 million smartphones; continued to strengthen North America position and shipped smartphones to carrier, distributor and retail customers globally
* Introduced six new Android-powered smartphones: BACKFLIP™, QUENCH™/CLIQ XT™, DEVOUR™, as well as three products designed for the Asia market, the MOTO XT701, MT710 and XT800, bringing our smartphone portfolio to eight
* Introduced SHOP4APPS, an application store, currently available for our consumers in China to enhance their Motorola Android experience
Home segment sales were $838 million, down 18 percent compared with the year-ago quarter. GAAP operating earnings were $20 million, compared to $3 million in the year-ago quarter.
Home highlights:
* Shipped 3.1 million digital entertainment devices
* Announced QIP eco-friendly set-top boxes for Verizon FiOS™ customers
* Introduced innovative 3DTV set-tops for cable, significantly enhancing 3D experience for consumers
* Strengthened North America position and secured wins with four customers to support the delivery of ultra-broadband triple play services
Enterprise Mobility Solutions segment sales were $1.7 billion, up 6 percent compared with the year-ago quarter. GAAP operating earnings were $141 million, compared with operating earnings of $66 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
* Secured one of the single largest TETRA terminal contracts ever awarded in Europe, including more than 50,000 terminals, from the German Federal Ministry of Interior
* Received several North America contracts, including a number of multi-million dollar awards from cities, and three statewide expansion wins, including Michigan and Wyoming
* Announced a series of rugged digital bar code scanners for harsh industrial environments, and launched the first cordless digital imager designed for healthcare
* Continued momentum in retail and in transportation and logistics, including a win with Con-Way, a leader in freight transportation and logistics, for the selection of the MC75 mobile computers
Networks segment sales were $896 million, down 7 percent compared with the year-ago quarter. GAAP operating earnings were $112 million, compared to $62 million in the year-ago quarter.
Networks highlights:
* Announced contract with Zain for the first LTE network deployment in Saudi Arabia
* Achieved first over-the-air TD-LTE data sessions at the Expo Center for World Expo 2010 in Shanghai; selected by China Mobile Communications Corporation to provide indoor TD-LTE coverage at the World Expo
* Shipped 2 millionth WiMAX CPE and dongles, doubling cumulative shipments in just five months
Second-Quarter 2010 Outlook
The Company's outlook for the second quarter of 2010 is for earnings of .07 to .09 per share. This outlook now excludes stock-based compensation and amortization of intangibles expenses of approximately .04 per share, as well as charges associated with items of the variety typically highlighted by the Company in its quarterly earnings releases.
April 29, 2010
Financial Highlights
* First-quarter sales of $5.0 billion
* First-quarter GAAP earnings of .03 per share, compared to a loss from continuing operations of .13 per share in first quarter 2009; first-quarter 2010 GAAP earnings include income of .01 per share from highlighted items
* Total cash* of $8.5 billion, a sequential increase of $455 million
* Enterprise Mobility Solutions sales of $1.7 billion; operating earnings of $141 million
* Mobile Devices sales of $1.6 billion; shipped 8.5 million handsets, including 2.3 million smartphones; operating loss of $192 million
* Networks sales of $896 million; operating earnings of $112 million
* Home sales of $838 million; operating earnings of $20 million
Click here to view the financial tables that are an integral part of this release.
Click here to view additional financial information.
SCHAUMBURG, Ill. – April 29, 2010 – Motorola, Inc. (NYSE: MOT) today reported sales of $5.0 billion in the first quarter of 2010. The GAAP earnings in the first quarter of 2010 were $69 million, or .03 per share, which compares to a GAAP loss from continuing operations of $291 million, or .13 per share, in the first quarter of 2009.
First-quarter 2010 GAAP earnings include net income of .01 per share from highlighted items, which are described at the end of the press release. GAAP earnings per share also include non-cash expenses for stock-based compensation and amortization of intangibles totaling .04 per share in the first quarter of 2010. Further details are outlined at the end of this press release.
During the quarter, the Company generated positive operating cash flow of $485 million and ended the quarter with a total cash* position of $8.5 billion.
"We continue to execute on our business strategy, build momentum in smartphones and improve our operating performance. During the quarter, we increased smartphone shipments sequentially and introduced six new devices," said Sanjay Jha, Motorola co-chief executive officer and CEO of Mobile Devices and Home. "We are in a strong position to improve our share in the rapidly growing smartphone market, particularly in light of our competitive portfolio, strengthened brand and improved carrier relationships."
Jha added, "The Mobile Devices and Home businesses are uniquely positioned to capitalize on the convergence of mobile experiences and home entertainment. We remain focused on developing next-generation products to capitalize on the opportunities of this dynamic market."
"Our Enterprise Mobility Solutions and Networks businesses performed very well during the quarter, delivering strong operating earnings and excellent cash generation," said Greg Brown, Motorola co-chief executive officer and CEO of Motorola Solutions. "These businesses continue to deliver best-in-class market leadership and financial returns."
Operating Results
Mobile Devices segment sales were $1.6 billion, down 9 percent compared with the year-ago quarter. The GAAP operating loss was $192 million, a significant improvement compared to the operating loss of $545 million in the year-ago quarter.
Mobile Devices highlights:
* Shipped 8.5 million units, including 2.3 million smartphones; continued to strengthen North America position and shipped smartphones to carrier, distributor and retail customers globally
* Introduced six new Android-powered smartphones: BACKFLIP™, QUENCH™/CLIQ XT™, DEVOUR™, as well as three products designed for the Asia market, the MOTO XT701, MT710 and XT800, bringing our smartphone portfolio to eight
* Introduced SHOP4APPS, an application store, currently available for our consumers in China to enhance their Motorola Android experience
Home segment sales were $838 million, down 18 percent compared with the year-ago quarter. GAAP operating earnings were $20 million, compared to $3 million in the year-ago quarter.
Home highlights:
* Shipped 3.1 million digital entertainment devices
* Announced QIP eco-friendly set-top boxes for Verizon FiOS™ customers
* Introduced innovative 3DTV set-tops for cable, significantly enhancing 3D experience for consumers
* Strengthened North America position and secured wins with four customers to support the delivery of ultra-broadband triple play services
Enterprise Mobility Solutions segment sales were $1.7 billion, up 6 percent compared with the year-ago quarter. GAAP operating earnings were $141 million, compared with operating earnings of $66 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
* Secured one of the single largest TETRA terminal contracts ever awarded in Europe, including more than 50,000 terminals, from the German Federal Ministry of Interior
* Received several North America contracts, including a number of multi-million dollar awards from cities, and three statewide expansion wins, including Michigan and Wyoming
* Announced a series of rugged digital bar code scanners for harsh industrial environments, and launched the first cordless digital imager designed for healthcare
* Continued momentum in retail and in transportation and logistics, including a win with Con-Way, a leader in freight transportation and logistics, for the selection of the MC75 mobile computers
Networks segment sales were $896 million, down 7 percent compared with the year-ago quarter. GAAP operating earnings were $112 million, compared to $62 million in the year-ago quarter.
Networks highlights:
* Announced contract with Zain for the first LTE network deployment in Saudi Arabia
* Achieved first over-the-air TD-LTE data sessions at the Expo Center for World Expo 2010 in Shanghai; selected by China Mobile Communications Corporation to provide indoor TD-LTE coverage at the World Expo
* Shipped 2 millionth WiMAX CPE and dongles, doubling cumulative shipments in just five months
Second-Quarter 2010 Outlook
The Company's outlook for the second quarter of 2010 is for earnings of .07 to .09 per share. This outlook now excludes stock-based compensation and amortization of intangibles expenses of approximately .04 per share, as well as charges associated with items of the variety typically highlighted by the Company in its quarterly earnings releases.
You let the Razr success go to your head... GoodbyeMoto
@MattsZ
I think they're over that.
@MattsZ Yea, this is what they get for re-releasing the same RAZR without anything new. Motorola Corp is getting what they deserve, like the US auto industry in the 80s and 90s.
@Center
I agree USA cars are a bad joke...
the only car that they made that was decent was the Buick Regal with the Turbo (aka Grand National) and they killed it off becuase fat ugly slobs were pissed because they were getting their arse handed to them when they bought the corvette. (also the Trans AM did that too)
Motot you passed up on the PALM OS.. now you die
@AppleDrank
You must not be up to snuff on the Ford & GM cars of the last 3 years. Ford especially has insanely good quality, feature rich cars which are more reliable than most Asian & European cars.
"Not yet"?? The phone division dropped into 9th position in market share. Behind Apple. Their market share dropped into half from year ago. Motorola phone division needs to be put out of misery.
@machat Yes, they are sure out of the game... Maybe Moto should try to sell the phone division to HP and let it sick together with Palm :P
But Engadget is a funny place, here we see a happy face, even though the company is doing poorly.
But when Nokia posts a profit, Engadget does a fox-news kind of journalism and twist the facts, puts an image of an N97 with blood finger prints and hints that things are very dire...
Come on guys, be more partial... Just like in the Steve Jobs comments about openess of Flash, where is the jabs you guys throw at MS for example?
It's pretty amazing how far Moto has sunk, I mean they practically "invented" the Cell Phone Market. Or at the least the idea that a Cell Phone could be sexy with the Razor and they somehow blew it.
@malexandria1 Speaking of inventing the mobile phone market. Does anyone know where I can see the old "Hello Moto" commercial that came out in 2000/2001?
@malexandria1
No no, Motorola actually invented the cellphone, not just the market with the RAZR... the Motorola DynaTAC
What would you expect? They came out with a very decent phone, the Droid. Then instead of improving upon their Android options they put out blurified lackluster offerings like the backflip and devour. It's gonna take some real good hardware to compete with Apple and HTC in the future hopefully they can make things interesting.
@JeremytheIndian Thanks for the intelligent post. So much better than hearing people calling for Motorola to go under. I agree completely. Motorola really needs to provide top notch hardware on the Android platform and just let Blur go.
Right now, unless you are HTC, its very hard to keep up with the pace of Android. Their best best is to make hardware that is going work well on Android and stick their software developers with that group to make sure all the new versions get on their hardware as fast as possible.
I love my Droid. Its a great phone. Great hardware and a great feel. I hope they do well.
One pretty good phone and a lot of mediocre phones just isn't gonna cut it. Especially against the stuff HTC is coming out with these days.
Motorola needs some sexy designed phones now. Tired of seeing their fugly phones. Its nice to see they made some profit and I want them to make more ( working with a moto contractor just to say)
Problem is that sure Motorola Droid isn't bad device at all, but they are far far away from the days of competing with Nokia in global scale.
It's a huge drop to a point that many European and as far as i have understood some Asian countries don't even have Motorola phones available from retailers anymore.
IMHO Moto has problems with design lately, The Droid and Devour keyboard are horrible. I thought the Devour keyboard's keys were soft rubber but they are just plasticky and bubbly I just did not like it to type. It looked like something else.
I do have to congratulate Moto for taking into Android. We have to admit, ugly or not, Moto has been consistently pouring options into the Android Market. I will go as far as to say that Moto and HTC are the major contributors into Android's success. I do want to see the Green Robot suceeed so he can continue doing this dance:
http://www.youtube.com/watch?v=CshYg0Tc-7k&feature=related
http://www.youtube.com/watch?v=4C6zWKhVmkg
Why dont we have ads like this in the US for Android?
@TikiTeko LOL those are awesome. Love the growling. Somewhat Lilo & Stichlike.
You do have to say 'ack' after seeing any new Moto android phone. They just don't have design skills. I think the Droid must have been a great fluke after seeing how much crap they are making.
Motorola showed some skill when they designed the Droid. It's not perfect but it's still one of the best smartphones/Android Phones available.But after that... we get the Backflip which is a joke. Before the Droid we got the Cliq which also sucks especially when compared to the Droid. The Devour is ok at best but the keyboard blows and again, it's lackluster especially when compared to the Droid.
Motorola may well be a one-trick pony with the Droid with nothing else worthy of note. Hey, at least we got one killer phone from them before Moto shrinks back to irrelevancy.
@HelghanSuperSniper
But the DROID is already obsolete.
Who would actually prefer a DROID over an HTC EVO 4G? IT is a total non-contest, especially with Verizon users also getting the Incredible.
@DrDr I would prefer the EVO over the Droid. I however am a Verizon customer because my works pays for my phone so I am sticking with my droid.. My phone is not obsolete either. There is this popular misconception that once something better comes out its completely useless. I am able to run any app from the Android marketplace I want. If my phone was obsolete this would not be the case.
I am perfectly comfortable with buying a phone and having a better phone come out a month to two months later. In Verizons case the better phone for their network took 6 months. I will happily wait another 6 months so I can get a new phone and I can't wait to see whats available then!
@DrDr that's the point you're missing. If you're on Verizon and you need a physical qwerty keyboard and want Android, show me an Android phone that's better than the Droid.It still runs great, has Android 2.1 and has a solid build on a great network.How is the Droid obsolete. That's a stupid assessment in and of itself. That is unless of course you want to play the stupid game of keeping up with the latest technology and buying a new phone every 3 months. The G1...you could make an argument for that being obsolete but then again, Cyanogen just got Android 2.1 running on that.
@DrDr Far from obsolete. The DROID is going strong and is a favorite among people who like control of their phones. I only hope the DROID 2 is as good.
i'am also a part of their profit, i bought a droid for my girlfriend a few months ago, because she wanted to play farmville and stuff in her lunch break on her phone, so i bought the droid.
... you know the big commercial droid can and such!
...flash and such...
maybe android 2.2 then, so yes, thanks motorola for wasting my time and money.
@shizzledmg
And the worst part is, they are making an iPhone Farmville app.
@shizzledmg huh? So you didn't do research before you made the purchase of the Droid and assumed that it would support Flash out of the box? It's Motorola's fault that you didn't read and understand before giving up the cash? I'll fault Motorola for some things but that's your own fault for being a uninformed consumer.
Microsoft Paint WIN.
If they would start putting out good devices like the Droid and not terrible handsets like the ClickXT and the Backflip they would be doing a hell of a lot better. Stop screwing around MOTO and follow HTCs lead.
It's their old dumb phones that are hurting the bottom line in the MD category. Their smartphone shipments are doing great...2.3 million in Q1. As they ship out more Android models (right now they've introduced only 8 out of the 20 new models they intend) those sales will start making up a bigger percentage of total sales. Just since they introduced two Androids to China last quarter, and I can't recall how many to South Korea, their percentage of sales to Asia has already increased 2% in the one quarter.
Oh, and many here will be surprised to know that the Backflip happens to be the third largest selling device on AT&T.
@SharonW
Yes, 2,3 Million, that is seriously awful. It does not even make them a top 5 player, even after the big droid push.
For comparison, the leading smartphone manufacturer sold well over 20 million smartphones in Q1.
@xbit
22!
@xbit Leading smart phone maker? Who, Nokia? They sold 20 million SMART phones in Q1? Sure you're not confusing that with how many total phones (smart and dumb) they sold?
Considering Apple sold 8 million smart phones in the last quarter, I think Mot is definitely in the top five having sold 1/3 as many as Apple coming from a cold start. Got any links for proof?
In fact, I think Mot is still the leading manufacturer of phones in the U.S.
@SharonW Nokia sells well over 100m mobile phones / quarter. 22m of those smartphones.
They P.O.'d a lot of people when they released the Cliq with Android 1.5 and then 2 weeks later push out the Droid with 2.0 and then their forums were nothing but people wondering when/if Cliq would ever be upgraded to 2.0, 2.1 and their forum manager had no answers.
Moto needs to be a bit more responsive to their customers. I will not be buying another handset from them until I see change.
This comany is tanking, but gets smiles from Engadget, though other companies make a billion every quarter and get introduced by blood stained devices. Strange.
@JFH
This looks better. Can we have some bloody fingerprints please?! Just kidding.
Moto need the 'OPHONE'.
WAIT
People don't like sh!tty phones like the back flop and the cliq? ??
WHAT A SURPRISE! ! ! ! !
Well what did they expect after they released the backflip & devour....those things are crap.
Not sure why I'm defending Motorola since I haven't had a Moto since the StarTAC (yes kids that was the iPhone of its day, and with its WAP browser I could surf the web and AIM too!)
Doesn't Moto make the only Android phones worth mentioning?
(NOT sorry HTC)
If Moto fails, Android fails, at least in the US Smartphone market...
You have android you failed!
Where's the HD angle..?
Not bashing, just curious, I follow all engadget twitter feeds, but was surprised to see this pop up a third time on @engadgethd
@FORDY Motorola produces STBs.
@Chris Ziegler
Ah, apologies :) That was a skim-read fail. I saw the Droid pic, phone in the title and whizzed through the numbers without taking in the mention to phone division as a side note.
how bout YOU MOTOROLA BRING THE SHOLES TO AT&T and make some more dough their. Cause I would really love to have your DROID But AT&T is being bunch of dumb asses for getting your ugly Backflip. And the Devour too also love to have it on AT&T.
@Inspector Gadget80 I got the Milestone to work on at&t,. Just buy one from Canada(through Telus) and unlock it and you're all set. eBay FTW!
If Motorola made a Droid/Milestone with a hackable firmware, Google Navigator for Australia included in the box (or available from the market) and support for UMTS 900 and 2100, that would likely be my next phone to replace my Motorola Z6. Bonus points if they can convince Vodafone Australia to carry it so I can get it on a subsidy :)
@jonwil The DROID has an unlocked bootloader, the Milestone does not. Google Navigatior is Google's responsibility, funnily enough, not Moto's. And if you'd read up a bit you'd find that the Milestone IS a 900/2100 UMTS phone.
You might want to stick with your Z6.
In other news; DIE MOTO DIE.