Motorola reports sales, earnings up 5 percent for Q3

Motorola Inc. reported net earnings and sales for the third quarter Monday, both up around 5 percent on a year ago. The company announced its results early to provide investors with a more complete picture of its finances, after financial ratings agency Moody's downgraded the company's credit rating, Motorola said.

Net earnings for the quarter ended Sept. 30 rose to US$116 million or US$0.05 per share, compared to US$111 million in the year-earlier quarter. Sales rose to US$6.8 billion from US$6.5 billion a year earlier, the company reported. Analysts polled by Thomson First Call expected earnings per share of US$0.03; Motorola's last prediction of its per-share earnings for the quarter was also US$0.03.

The company expects fourth-quarter sales to total between US$7.5 billion and US$7.8 billion, with earnings per share between US$0.08 and US$0.12, the company said. Analysts predict earnings per share of US$0.12 in the fourth quarter, based on earlier Motorola guidance of US$0.12.

Excluding special items, net earnings were US$132 million, compared to US$133 million a year earlier, the company said.

The company increased orders in the quarter by 25 percent compared to the year-earlier period, it said.

Of its major operating segments, the personal communications segment brought in the most revenue during the quarter, at US$2.9 billion, an increase of 8 percent compared to the previous year. Orders were up 44 percent, to US$3.7 billion, the company said. It shipped around 20 million mobile phones during the quarter, up 19 percent on the previous year. Demand for Motorola handsets strengthened in North America, but sales decreased in Asia as the company lost market share in China, it said.

During the third quarter the company began shipping 17 new handset models, 11 of them with color displays and 5 with built-in cameras. In the fourth quarter, it expects to launch at least 18 models, 15 of them with color screens and eight with cameras. Most of the fourth-quarter models will be for GSM (Global System for Mobile Communications) networks.

Sales at Motorola's semiconductor products segment slipped 4 percent year-on-year to US$1.2 billion for the quarter, dragged down by lower capital spending by network operators and increased competition in the mobile phone handset market. In other areas, the company won new contracts, including video games, car navigation systems, and handheld computers. Motorola signalled its intention last week to spin off its semiconductor segment into a separate company.

Sales in the global telecom solutions segment, which builds and installs telecommunication equipment for network operators, rose 2 percent compared to the year-earlier quarter to US$1.1 billion.

In the commercial, government and industrial solutions segment, which makes and installs IT and radio systems, sales rose 17 percent year-on-year to US$1.0 billion, although orders only rose 4 percent. Motorola attributed much of the increase in sales to "homeland security initiatives." The company is deploying a nationwide identification system for the Republic of Serbia, for example, combining fingerprint scanning, facial imaging and automatic fingerprint identification, it said.

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