Earnings Preview: Eyes on smart phones as Motorola reports first-quart results
By APWednesday, April 28, 2010
Earnings Preview: Motorola to report Q1 results
NEW YORK — Motorola Inc. reports its first-quarter results before the stock market opens Thursday.
WHAT TO WATCH FOR: Motorola is trying to turnaround its troubled cell phone business by focusing on smart phones that run Google Inc.’s Android software. The first of those phones, the Droid and the Cliq, went on sale last quarter, and Motorola reported selling a respectable 2 million.
When reporting results for the fourth quarter, Sanjay Jha, the head of the phone division, said he expected smart phone sales to be down in the first quarter, since there would be no new phone with as much marketing behind it as the Droid got from Verizon Wireless last year.
Analyst William Choi at Jefferies & Co. said the Droid is still selling well, and expects Motorola to report selling 1.9 million Android phones.
Motorola will need to report selling more than 10.5 million phones in the quarter to regain its spot as the world’s fourth-largest phone maker. Swedish-Japanese joint venture Sony Ericsson reported selling that many in the quarter. Nokia Corp., Samsung Electronics Co. and LG Electronics Inc. are all far larger.
While it loses money on cell phones, Motorola’s bottom line is propped up by its other two divisions, which make things like police radios, wireless network equipment and cable set-top boxes.
WHY IT MATTERS: Motorola cut nearly 11,000 jobs last year, or 17 percent of its work force, as it hurried to reduce costs in the face of shrinking sales. Last quarter, executives said most of the layoffs were now behind the company.
The company says it’s on track to split its cell phone business from the rest of the company early next year. This year, it’s become clear that the cell phone company under Sanjay Jha would include the division that makes set-top boxes as well.
WHAT’S EXPECTED: Motorola has said it expects a loss of 1 cent to 3 cents per share, excluding unusual items. Analysts polled by Thomson Reuters expect Motorola to post a loss of 3 cents per share on $5.1 billion in revenue.
LAST YEAR’S QUARTER: Motorola reported a loss of $231 million, or 13 cents per share, on sales of $5.4 billion.
