Motorola makes fat profit from slim phone

Motorola makes fat profit from slim phone

Motorola's earnings during the fourth quarter 2005 nearly doubled earnings during the same quarter last year.

Motorola's earnings per share for the fourth quarter 2005 nearly doubled, driven by sales of mobile phones, the company revealed late on Thursday. While some of Motorola's results, such as operating margins on mobile phones, worry investors, the positive results are a sharp turnaround from just a few years ago when Motorola struggled to stay afloat.

Earnings per share for the quarter were US$0.47 (AU$0.63), up from US$0.26 in the fourth quarter of 2004. That includes US$0.13 per share related to payment Motorola received from a Turkish operator with which Motorola and other suppliers have fought for years to receive payment from. Full year earnings per share were US$1.81 compared to US$0.64 in 2004.

Sales at Motorola for the fourth quarter 2005 and for the full year 2005 were up 18 percent, reaching US$10.43 billion and US$36.84 billion respectively.

Motorola's positive results were driven by its handset division, particularly the success of its ultra-thin Razr phone. Device sales were up 30 percent for the fourth quarter compared with the same quarter in 2004. Unit shipments for the year were up 40 percent over the previous year and operating earnings for the year increased by 27 percent.

Motorola estimates that it has moved up more than 3 percentage points in the global market share ranking for mobile device suppliers so that the company in the fourth quarter garnered 19 percent of the market. Nokia continues to hold first place.

While results of Motorola's handset division were impressive, some analysts continue to worry about operating margins and execution. The handset division showed 11 percent operating margins, said Ed Zander, chairman and chief executive officer of Motorola during a conference call to discuss earnings. Overall margins at the company were 12.5 percent.

Operating margins in Motorola's handset business are far lower than competitors Nokia Corp. and Samsung Electronics Co, John Slack, a stock analyst at Morningstar, wrote in a report in December. He said he expected operating margins at Motorola of around 12 percent over the next few years but that Motorola's expectation of reaching as high as 15 percent was unlikely. Still, in 2003, Motorola's operating margin was 4 percent, Slack wrote.

Analysts may also be concerned that Zander said Motorola was unable to fulfill some orders because of supply constraints.

Motorola has recently improved its market position after a dramatic downturn at the company the led to massive layoffs and restructuring.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Brand Post

Channel Roadmap

The Channel Roadmap is a bespoke content hub housing strategic priorities from technology vendors for 2022 and beyond, partners can find the guidance on the key technologies and markets to pursue, to help build a blueprint for future success.

Show Comments