Motorola Inc. Tuesday posted a quarterly net loss due to the partial spinoff of its chip unit, but sales surged and it won share from its rivals in the growing global cell phone market.
Motorola, whose shares rose 3.5 percent in after-hours trading on INET, also forecast stronger-than-expected sales in the current third quarter.
Motorola reported a second-quarter net loss of $203 million, or 9 cents a share, compared with a profit of $119 million, or 5 cents a share, in the year-earlier period. Sales in the quarter at the Schaumburg, Illinois-based company rose 41 percent from last year to $8.7 billion. However, executives said they cannot relax in the cutthroat market for cell phone handsets, where the company competes with Nokiaand Samsung Electronics.
“We’re taking it one quarter at a time,” Motorola Chief Executive Edward Zander told Reuters in a telephone interview. ”We know what we’ve got to do over the next two years, rearchitecting a lot of the processes of the company and some of our strategies, and the competition is fierce.”
In April, the world’s second-largest cell-phone maker said first-quarter profit tripled, blowing past Wall Street’s expectations. Excluding the costs associated with last week’s initial public offering of stock in the chip business — Freescale Semiconductor Inc.— Motorola again topped Wall Street’s expectations.
It has benefited at the expense of larger rival Nokia, which has struggled with a product lineup lacking models consumers want.
“Nokia’s losses are Motorola’s gains,” said Charter Equity Research analyst Edward Snyder, who has a “buy” rating on Motorola’s shares. “They’re continuing the momentum they had last quarter.”
Nokia saw its stock plunge to near six-year lows after it warned last week for the third time in as many months that earnings would fall further as it cuts handset prices to protect market share.
Analysts have said Nokia’s price cuts could undermine the profitability of the whole industry as rivals could be forced to cut prices too, despite the booming global demand for handsets. Excluding one-time items, Motorola earned 21 cents a share. The quarter included a noncash tax expense totaling almost $900 million, or 38 cents a share, as well as a tax benefit of $197 million, or 8 cents a share.
Analysts were expecting Motorola to post second-quarter earnings before one-time items of about 18 cents a share on sales of $8.44 billion, according to Reuters Estimates. Motorola forecast third-quarter sales of $8.4 billion to $8.8 billion and earnings according to generally accepted accounting principles of 15 cents to 19 cents a share. Analysts were expecting third-quarter sales of $8.41 billion, according to Reuters Estimates.
The forecast excludes a portion of the chip business, which was partially spun off last week. Motorola also revealed Tuesday that Tom Lynch, the head of the cell phone business, would leave the company at the end of the summer for personal reasons. No replacement was named, but Zander said he wants a replacement in place before the fourth quarter starts.
