Motorola announced its Q1 2010 earnings and the communications hardware company exceeded analysts expectations. Twenty-Ten started off well for Motorola as the company posted a profit of $69 million or 3 cents per share which contrasts starkly with the $203 million loss or 10 cents per share posted in the same quarter last year. Net sales topped out at $5.04 billion, down 6% from the $5.37 billion posted in Q1 2009. Despite this slight slip, Motorola beat the Street as analysts were expecting 1-2 cents loss on $5.1 billion of sales. All this good news had a positive effect on Motorola’s stock which is currently trading at $7.20 per share, up 4% at the writing of this post. This is only part of the story, however, so hit the jump to see how the ever-important mobile division fared.
Motorola’s mobile division is still operating in the red but the outlook is positive. Mobile sales reached $1.6 billion, down 9% year over year and the division posted a loss of $192 million, a figure significantly less than the $545 million loss posted in Q1 2009. Motorola shipped 8.5 million units in Q1 2010, falling short of the 10 million that were expected. Smartphones were the bright point in an otherwise somber quarter. Of the 8.5 million phones that shipped, 2.3 million were smartphones, a figure that exceeded analyst’s expectations of 1.8 million.
Motorola expects the upcoming quarters to reflect this trend with its iDEN and feature phone sales remaining flat and its smartphone sales increasing both in the US and globally. The handset maker projects it can ship 12-14 million handsets per quarter by the end of the fiscal year with an increasing emphasis on smartphones. Motorola will remain in the feature phone business primarily due to demand in emerging markets, for brand extension, and to meet customer’s minimum portfolio requirements. Motorola intends to take no capital or inventory risk in this low-end market.
They plan to ship 20 total handsets by the end of the year and recognize that the smartphone is the key to its profitability in this highly competitive market. Motorola has limited interest in owning its own mobile OS and remains committed to Android, but that’s not exactly a shocker. The handset manufacturer is pleased with Google’s pace of innovation and believes the search giant has the infrastructure needed to keep the mobile platform fresh and competitive. In the end, this is good news for Android fans as we will see lots more Android handsets from Motorola in the future.
