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Motorola progress on mobile operations

26 октября 2007

Motorola managed to climb back into profit in the third quarter – its first quarterly profit this year - and signalled progress in its efforts to turn around its struggling mobile phone operations despite continuing market share losses.

Third-quarter profits fell by 94 per cent to $60m, or 3 cents a share, compared with $968m, or 39 cents a share a year earlier. Revenue fell by 17 per cent to $8.81bn. But Motorola's shares gained about 5 per cent in early trading as investors took comfort from a more positive outlook that beat Wall Street expectations.

The company said it now expected earnings from continuing operations of 12 cents to 14 cents a share in the fourth quarter compared with the 10 cents a share that analysts were expecting. "The third quarter was about progress," Ed Zander, Motorola’s chief executive, told analysts in a conference call but added, "we also recognise there's a lot of work to do."

The Illinois-based company and Mr Zander have been under pressure after misreading the market and relying too heavily on sales of the ageing Razr phone for too long. Since the start of the year Motorola has cut costs aggressively and has rolled out a series of new handsets in an effort to turn the mobile phone operations around amid heightened competition.

The latest results which included slight gains in profitability and average handset selling prices, coupled with a rosier fourth-quarter forecast, should ease pressure on Mr Zander who has faced calls from some shareholders for his resignation despite surviving a proxy battle launched by Carl Icahn, the Wall Street investor.

In the third quarter, Motorola shipped 37.2m handsets and revenues in the mobile-device unit fell by 36 per cent to $4.45bn. The segment lost $248m, compared with year-earlier earnings of $843m. Motorola said in July that it did not expect the unit to be profitable by year-end, although it did expect financial results to improve during the second half of the year and has said it will be profitable again next year.

Motorola's share of the global handset market is estimated to be 13 per cent, down 50 basis points from the second quarter, ranking Motorola number three behind Finland”s Nokia which has widened its lead and Korea’s Samsung Electronics which has also been growing its market share. In the latest quarter Motorola continued to lose market share in the Asia Pacific region, including India, but it regained its lead in Latin America and kept its lead in North America.

"We see the industry growing in the double-digit-plus range," said Greg Brown, Motorola's president and chief operating officer. He added the company would be pushing more third-generation, or 3G, phones, as demand increases.

Источник: Financial Times

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