Motorola Reports Second-Quarter Financial Results
July 30, 2009
- Second-quarter sales of $5.5 billion
- Second-quarter GAAP earnings from continuing operations of $0.01 per share, including net income of $0.02 per share from highlighted items
- Total cash of $6.5 billion, a sequential increase of $360 million
- Increased cost reduction plan by $100 million; now expect total cost savings of $1.8 billion for 2009
- Home and Networks Mobility sales of $2.0 billion; operating earnings of $153 million
- Mobile Devices sales of $1.8 billion; shipped 14.8 million handsets; operating loss of $253 million, improved by 50 percent sequentially
- Enterprise Mobility Solutions sales of $1.7 billion; operating earnings of $227 million
Click here to view the financial tables that are an integral part of this release.
Click here to view additional financial information.
SCHAUMBURG, Ill. – July 30, 2009 – Motorola, Inc. (NYSE: MOT) today reported sales of $5.5 billion in the second quarter of 2009. The GAAP earnings from continuing operations in the second quarter of 2009 were $26 million, or $0.01 per share. The GAAP earnings from continuing operations includes net income of $0.02 per share from highlighted items, which are outlined in the table at the end of the press release.
Total cash* at the end of the second quarter was $6.5 billion, an increase of $360 million compared to the end of the first quarter. The Company generated $150 million of positive operating cash flow during the quarter and expects to continue to generate positive cash flow in the second half of the year.
Greg Brown, co-CEO of Motorola and CEO of Broadband Mobility Solutions, said, “In Broadband Mobility Solutions, we continued to lead in our key markets and delivered solid results in a very challenging economic environment. We further reduced our cost structure, improved our operating margins and decreased inventory on a sequential basis. We also continued to focus our R&D efforts on innovation in areas such as next-generation public safety, enterprise mobile computing, enhanced broadband video and 4G wireless.”
Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices, added, "We have agreements in place with carriers and remain on track to bring our new smartphone devices to market for the holiday selling season. We are also excited about our 2010 portfolio and are pleased with the customer feedback. In Mobile Devices, we improved the operating loss, reflecting a lower cost structure, and substantially reduced cash consumption as compared to the first quarter.”
Mobile Devices segment sales were $1.8 billion, down 45 percent compared to the year-ago quarter. The GAAP operating loss was $253 million, compared to an operating loss of $346 million in the year-ago quarter. The segment reduced its operating loss by 50 percent sequentially from $509 million in the first quarter of 2009.
Mobile Devices highlights:
- Shipped 14.8 million handsets; estimated global handset market share of 5.5 percent
- Continued progress on differentiated smartphone devices targeted to launch in the fourth quarter of 2009
- Launched the CDMA Rival™ A455, a side-slider with one-touch messaging access and QWERTY keyboard; and the 3G Karma™ QA1, a slide-out QWERTY with one-click access to Facebook and MySpace
- Launched the iDEN Clutch™ i465, Motorola’s first device that combines the power of push-to-talk and the convenience of a QWERTY keyboard
Home and Networks Mobility segment sales were $2.0 billion, down 27 percent compared to the year-ago quarter. GAAP operating earnings were $153 million, compared to operating earnings of $245 million in the year-ago quarter.
Home and Networks Mobility highlights:
- Shipped 3.7 million digital entertainment devices
- Launched the world’s first retail DOCSIS® 3.0 cable modem
- Surpassed cumulative WiMAX CPE shipments of 650,000 units
- Announced an all-fiber enterprise passive optical LAN solution designed to reduce network cost and complexity
Enterprise Mobility Solutions segment sales were $1.7 billion, down 17 percent compared to the year-ago quarter. GAAP operating earnings were $227 million, compared to operating earnings of $377 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
- Shipped APX™ 7000, a new portable radio platform for the public safety market, which provides multi-band functionality for system interoperability and unmatched volume and audio clarity for extreme environments
- Released Capacity Plus software for MOTOTRBO™, a digital trunked radio solution for enterprise users, greatly increasing single-site capacity for critical voice and data communication
- Released the world’s first TETRA base station supporting TETRA Enhanced Data Services with IP-over-Ethernet connectivity
- Secured public safety awards from the State of Missouri, German Ministry of Interior (Berlin), City of Hamilton in Ontario Canada, and West Australian Police
Third-Quarter 2009 Outlook
The Company’s outlook for third-quarter earnings from continuing operations is $(0.01) to $0.01 per share. This outlook excludes charges associated with the Company’s operating expense reduction initiatives, as well as any other items of the variety typically highlighted by the Company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
(In millions, except per share amounts)
Earnings from continuing operations**
Diluted earnings per common share:
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Weighted average diluted common shares outstanding
The table of highlighted items for the second quarter of 2009 is as follows:
EPS Impact Exp/(Inc)
Gain on Sigma Fund investments
Adjustment to software/silicon platform consolidation reserves
Reorganization of business and similar charges
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Conference Call and Webcast
Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Thursday, July 30, 2009. The conference call will be webcast live with audio and slides at www.motorola.com/investor.
This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about: cost savings and financial impact from cost-reduction actions, levels of cash generation and consumption in 2009, the timing and impact of the launch of new products and Motorola’s financial outlook for the third quarter of 2009. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 30 in Item 1A of Motorola’s 2008 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola’s actual results to differ materially from those estimated or predicted in the forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to: (1) the Company’s ability to improve financial performance and increase market share in its Mobile Devices business; (2) the level of demand for the Company’s products, particularly in light of global economic conditions which may lead consumers, businesses and governments to defer purchases in response to tighter credit and negative financial news; (3) the Company’s ability to introduce new products and technologies in a timely manner; (4) the possible negative effects on the Company’s business operations, financial performance or assets as a result of its plan to create two independent, publicly traded companies; (5) unexpected negative consequences from the Company’s ongoing restructuring and cost reduction activities, including as a result of significant restructuring at the Mobile Devices business; (6) negative impact on the Company’s business from the global financial crisis and tightening in the credit markets, which may include: (i) the inability of customers to obtain financing for purchases of the Company’s products; (ii) the viability of the Company’s suppliers that may no longer have access to necessary financing; (iii) reduced value of investments held by the Company’s pension plan and other defined benefit plans; (iv) fair and/or actual value of the Company’s debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the Company’s financial position; (vi) difficulties or increased costs for the Company in obtaining financing; and (vii) the inability of the Company to sell accounts receivable and long-term receivables in volumes and on terms comparable to historical practices; (7) the economic outlook for the telecommunications and broadband industries; (8) the Company’s ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (9) risks related to dependence on certain key suppliers; (10) the impact on the Company’s performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (11) risks related to the Company’s high volume of manufacturing and sales in Asia; (12) the creditworthiness of the Company’s customers and distributors, particularly purchasers of large infrastructure systems; (13) variability in income received from licensing the Company’s intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of the strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact on the Company from continuing hostilities in countries where the Company does business; (17) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the Company’s outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.
*“Total cash” equals Cash and cash equivalents plus Sigma fund (current and non-current) plus Short-term investments.
**Amounts attributable to Motorola, Inc. common shareholders
Motorola is known around the world for innovation in communications and is focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $30.1 billion in 2008. For more information, please visit www.motorola.com