International
Motorola reports net income plunged 48% in Q4 2006
By Finfacts Team
Jan 19, 2007, 12:35

US mobile phone manufacturer Motorola reported Friday that its fourth-quarter net income plunged 48%, which has been severely dented by falling margins of its mobile-devices. 

Net income fell to $624 million, or 25 cents a share, for the quarter, the company said. A year ago, Motorola posted net income of $1.2 billion, or 47 cents a share. The latest results included four cents a share from discontinued operations and 21 cents a share from continuing operations.

Analysts had expected Motorola, the world's No. 2 mobile phone company after Finland's Nokia, to report fourth-quarter earnings, excluding items, of 25 cents a share.

Motorola said revenue rose 17% to $11.79 billion. Sales in the mobile-devices segment rose 19% to $7.8 billion.

Motorola has sold more than 50 million Razr phones world-wide since the product's launch in the fourth quarter of 2004. However, it slashed prices to gain market share.

Mobile Devices segment sales were $7.8 billion, up 19 percent compared with the year-ago quarter. Operating earnings were $341 million, compared with operating earnings of $663 million in the year-ago quarter. Operating earnings were below the company’s internal forecast at the start of the fourth quarter due to an unfavorable geographical and product-tier mix. For full year 2006 compared to full year 2005, sales increased 32 percent and operating earnings increased 23 percent.

• Sales up 17 percent: record sales of $11.8 billion, compared to fourth-quarter 2005 sales of $10.0 billion

• GAAP earnings from continuing operations of $0.21 per share, including net charges of $0.05 per share from items highlighted below

• Record handset shipments of 65.7 million units, up 47 percent versus the year-ago quarter and up 22 percent versus the prior quarter

• Global handset market share estimated at 23.3 percent, up 4.6 percentage points versus the year-ago quarter and up 0.9 percentage points versus the prior quarter

• Record shipment milestone of digital entertainment devices and modems

• Record sales to public-safety customers

• Positive operating cash flow of approximately $700 million

Full-Year 2006 Financial Highlights

• Sales up 22 percent: record sales of $42.9 billion, compared to 2005 sales of $35.3 billion

• GAAP earnings from continuing operations of $1.30 per share

• Record handset shipments of 217.4 million units, up 49 percent versus 2005

• Global annual handset market share estimated at 22.2 percent, up 4.3 percentage points versus 2005

• Record shipment milestone of digital entertainment devices and modems

• Record sales to public-safety customers

• Positive operating cash flow of approximately $3.5 billion

“As I said earlier this month, we are disappointed with our fourth quarter operating earnings performance. However, the company generated strong revenue growth and met or exceeded our goals in many areas during the quarter. I am confident that we remain well positioned for continued growth and success,” said Ed Zander, chairman and CEO.

“Looking at the full year, I am pleased with our progress. Our business remains solid, and we will continue to execute on our focused, strategic plan to create value for our shareholders.  We remain committed to increasing our profitability, while delivering compelling new products and solutions to our customers in 2007,” Zander added.