Moto's Profits Plunge in 3Q

Oct 25, 01:37 PM

Current Headlines: By Mike Hughlett, Chicago Tribune

Oct. 25--Motorola Inc.'s earnings plunged more than 90 percent during the third quarter, but at least the beleagured company posted a profit after being mired in red ink over the past six months. Plus, it painted a brighter picture for the fourth quarter.

The Schaumburg-based cell phone giant Thursday announced a net profit of $60 million or 3 cents per share. On a continuing operations basis, its net income was 2 cents per share, including 4 cents in charges associated with previously announced job cuts.

Those results were a tad below the 4 cents per share expected by analysts polled by Thomson Financial. But Motorola said Thursday that it expects fourth quarter profits to range from 12 to 14 cents, two to four cents more than analysts had been expecting.

Wall Street seemed to warm to Motorola's earnings report as evidence that the company may be turning around. In pre-market trading Thursday, Motorola's stock was up over four percent.

"Our third quarter can be characterized by one word: progress," Motorola Chief Executive Edward Zander said during a conference call with stock analysts. "We also realize there is a lot more work to do."

Indeed, the company's mobile phone unit, which normally supplies the bulk of its earnings, lost $138 million during the quarter and its sales were down 36 percent compared to the same time in 2006. But that loss was about half of what it was during the second quarter.

"The operating changes in mobile devices are beginning to yield results," Motorola Chief Operating Officer Greg Brown said in a conference call with analysts. "But keep in mind, we are not where we need to be."

Indeed, Motorola over the past year has fallen from darling of the cell phone world to the industry's goat. It was late in launching new phones tailored for faster networks; it didn't come up with an adequate succesor to the Razr; and it got beat up in low-cost markets by its archrival Nokia.

The decline in cell phone sales during the third quarter helped push Motorola's overall sales down by 17 percent compared to the same time last year. Still, at $8.81 billion, those sales were in line with analysts' estimates.

mhughlett@tribune.com

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