Motorola posts surprise profit

IDG News Service - Even before the phones it is hinging its future livelihood on hit the market, Motorola posted a surprise profit and upped expectations for the current quarter.

The company's third-quarter earnings report comes a day after a heavily promoted launch in New York City of a Motorola Android-based phone to run on Verizon's network. Neither that phone nor the earlier-announced Cliq Android phone is yet available to users in the U.S.; the European version of the Cliq recently went on sale.

During its third quarter, Motorola reported sales of $5.5 billion and earnings of 1 cent per share. Sales are down from $7.5 billion in the same quarter last year, but earnings per share improved over a loss of 18 cents last year.

Analysts polled by Thomson Reuters were expecting the company to break even, on an earnings-per-share basis.

Despite the surprise profit, Motorola had bad news to report. It shipped 13.6 million handsets during the quarter, compared to 25.4 million phones during the same period last year. Sales in its mobile devices segment were $1.7 billion, down 46% over last year's corresponding quarter.

But the company has just begun selling its new breed of phones.

"In the fourth quarter we'll begin to expand our smartphone portfolio as we ship new devices to additional carriers and markets," Sanjay Jha, co-CEO of Motorola and CEO of its mobile device group, said during a conference call to discuss the earnings report.

Motorola said that most of its new phones next year will run Android, and Jha said the majority will also include Motoblur, software Motorola developed that is designed to let users combine all their social-networking activities in one place.

Motorola has high hopes that once those new phones hit the market, its prospects will improve. It said it is expecting earnings per share for the fourth quarter this year of between 7 cents and 9 cents. That's higher than the current consensus from analysts polled by Thomson Reuters, who are expecting 6 cents per share for the quarter.

Despite Motorola's historical support of Windows Mobile and other phones targeting the enterprise, businesses should not expect much from Motorola -- at least in the near future. Motoblur and future phones will be mainly targeted at consumers, prosumers and heavy social messaging users, Jha said. "These market segments are growing in the high double-digit rate and faster than the enterprise market," he said.