Mobile phone maker Motorola Inc. (MOT) reported Thursday a profit for the third quarter, compared to prior year's loss, on lower costs and expenses. Meanwhile, net sales fell 27%, and missed market projections, on poor segmental performance. Further, the company issued fourth-quarter earnings forecast, above Wall Street view. Separately, Schaumburg, Illinois-based Motorola said it appointed Edward Fitzpatrick, who was acting Chief Financial Officer since February 2009, as permanent CFO, effective immediately.
Net earnings for the quarter was $22 million, compared to prior year's loss of $391 million. Third-quarter net earnings attributable to the company were $12 million or $0.01 per share, compared to a loss of $397 million or $0.18 per share in the same quarter last year.
The latest quarter results included net charges of $0.01 per share, related to a charge for an environmental reserve and costs associated with ongoing efforts to prepare for separation into two independent public companies.
On average, 26 analysts polled by Thomson Reuters expected the company to report breakeven per share for the quarter. Analysts' estimates typically exclude special items.
In its preceding second quarter, Motorola had reported a net profit of $35 million, and net earnings attributable to Motorola common shareholders of $26 million or $0.01 per share.
Net sales for the third quarter plunged to $5.45 billion from $7.48 billion in the prior year quarter, and missed 25 Wall Street analysts' consensus estimate of $5.54 billion. Third-quarter net sales also dropped from $5.50 billion recorded in the second quarter.
Gross margin for the quarter was $1.81 billion or 33.2% of total sales, up from last year's $1.80 billion or $24.1% of total sales a year ago. The company reported an operating earnings of $128 million, compared to last year's loss of $452 million.
Segment-wise, Home and Networks Mobility sales fell 15% year-over-year to $2.01 billion, and operating earnings dropped to $199 million from $263 million in the year-ago quarter. During the quarter, the segment shipped 3.3 million digital entertainment devices.
In the Enterprise Mobility Solutions, quarterly sales dropped 13% to $1.77 billion, and operating earnings fell to $306 million from $403 million last year.
Mobile Devices segment sales were $1.69 billion, down 46% from last year, and the segment reported an operating loss of $183 million, narrower than last year's operating loss of $840 million. The company shipped 13.6 million handsets in the quarter, and the estimated global handset market share was 4.7%.
Commenting on the results, Sanjay Jha, co-chief executive officer of Motorola and chief executive officer of Mobile Devices, said, "We delivered on our commitment to improve the financial performance of Mobile Devices and to commercially launch two smartphones in time for the fourth- quarter holiday season. The introductions of our new products powered by Android are important milestones as we begin to address the mobilization of the Internet and the growing demand for modern smartphones. Next year, we will continue to expand our smartphone portfolio and deliver improved financial results."
Among peers, Nokia Corp. (NOK) recently reported a loss for the third quarter that mainly reflected a hefty impairment charge in Nokia Siemens Networks. Net loss attributable to equity holders of the parent was 559 million euros or 0.15 euros per share, compared to a profit of 1.087 billion euros or 0.29 euros per share a year earlier. The world's largest mobile phone maker's third-quarter net sales fell 19.8% to 9.81 billion euros from 12.24 billion euros in the prior-year quarter, while on a constant currency, sales were down 19%.
Last week, Swedish telecom equipment firm LM Ericsson Telephone Co. (ERIC) reported a sharp decline in its third-quarter profit, hurt by lower sales at its Network and Multimedia businesses on lower demand. Results were dragged down further by higher restructuring charges and the company's share of losses in its joint ventures Sony Ericsson and ST-Ericsson. For the third quarter, the company reported net income of SEK 0.8 billion, down 74% from SEK 2.9 billion in the prior-year quarter. Earnings per share slid to SEK 0.25 from SEK 0.89 in the previous year. The company also reported a 6% decline in its third quarter revenues to SEK 46.4 billion from SEK 49.2 billion a year ago.
In early October, Sony Ericsson Mobile Communications AB, a joint venture between Sony Corp. (SNE) and LM Ericsson Telephone Co. (ERIC), reported a wider loss for the third quarter, reflecting a 42% drop in net sales on lower demand and pricing. The company's net loss widened to EUR 164 million from loss of EUR 25 million in the same quarter last year. Net sales for the quarter dropped 42% year-over-year to EUR 1.62 billion.
For the nine months of fiscal 2009, Motorola's net loss narrowed to $171 million from prior year's loss of $584 million. Net loss attributable to Motorola was $193 million or $0.08 per share, compared to loss of $587 million or $0.26 per share a year ago. Loss from continuing operations for the period attributable to Motorola narrowed to $253 million or $0.11 per share from loss of $587 million or $0.26 per share in 2008. Nine-month net sales fell 29% to $16.32 billion from $23.01 billion in the same period last year.
Looking ahead to the fourth quarter, Motorola said it expects earnings from continuing operations, excluding items, to be in the range of $0.07 to $0.09 per share. Analysts expect the company to report earnings of $0.06 per share for the quarter, with estimates ranging between $0.01 and $0.12 per share.
The company also said it increased cost reduction plan by $100 million, and now expect total cost savings of $1.9 billion for 2009.
In a separate statement, Motorola said it appointed Edward Fitzpatrick, senior vice president, as Chief Financial Officer, effective immediately. Fitzpatrick, who joined the company in 2000, has served as acting Chief Financial Officer since February 2009 and corporate controller since January 2009.
Previously, he was corporate Vice President of finance for Motorola's Home & Networks Mobility business, and also served as Vice President and Controller for the Networks & Enterprise and the Government & Enterprise Mobility Solutions businesses and controller for the Connected Home Solutions business.
Commenting on the appointment, Greg Brown and Sanjay Jha, co-chief executive officers, stated, "Ed has made numerous contributions, including driving significant cost reduction actions and focusing the company on working capital improvements and cash flow generation."
MOT is currently trading at $8.59 in the pre-market activity, up $0.63 or 7.91%. In the past 52 weeks, shares have been trading in a range of $2.98 to $9.45.
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