- Third-quarter sales of $5.5 billion
- Third-quarter GAAP earnings from continuing operations of .01 per share, including net charges of .01 per share from highlighted items
- Total cash* of $7.2 billion, a sequential increase of $700 million
- Increased cost reduction plan by $100 million; now expect total cost savings of $1.9 billion for 2009
- Home and Networks Mobility sales of $2.0 billion; operating earnings of $199 million
- Enterprise Mobility Solutions sales of $1.8 billion; operating earnings of $306 million
- Mobile Devices sales of $1.7 billion; shipped 13.6 million handsets; operating loss of $183 million
- Announced new smartphones powered by Android OS
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SCHAUMBURG, Ill. – October 29, 2009 – Motorola, Inc. (NYSE: MOT) today reported sales of $5.5 billion in the third quarter of 2009. The GAAP earnings from continuing operations in the third quarter of 2009 were $12 million, or .01 per share. The GAAP earnings from continuing operations include net charges of .01 per share from highlighted items, which are outlined at the end of this press release.
Total cash* at the end of the third quarter was $7.2 billion, an increase of $700 million compared to the end of the second quarter. The Company generated $616 million of positive operating cash flow during the quarter and expects to continue to generate positive cash flow in the fourth quarter.
Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices, said, “We delivered on our commitment to improve the financial performance of Mobile Devices and to commercially launch two smartphones in time for the fourth- quarter holiday season. The introductions of our new products powered by Android are important milestones as we begin to address the mobilization of the Internet and the growing demand for modern smartphones. Next year, we will continue to expand our smartphone portfolio and deliver improved financial results.”
Greg Brown, co-CEO of Motorola and CEO of Broadband Mobility Solutions, said, “Broadband Mobility Solutions performed well during the quarter. We continued to manage our cost structure and also delivered solid operating margins. We secured additional contract wins and launched new devices, including the MC9500, the industry’s most rugged mobile computer. As the economic environment improves, we believe our businesses are well positioned for continued success.”
Operating Results
Mobile Devices segment sales were $1.7 billion, down 46 percent compared to the year-ago quarter. The GAAP operating loss was $183 million, compared to an operating loss of $840 million in the year-ago quarter. The segment reduced its operating loss by 28 percent sequentially from $253 million in the second quarter of 2009.
Mobile Devices highlights:
Home and Networks Mobility segment sales were $2.0 billion, down 15 percent compared to the year-ago quarter. GAAP operating earnings were $199 million, compared to operating earnings of $263 million in the year-ago quarter.
Home and Networks Mobility highlights:
- Shipped 3.3 million digital entertainment devices
- Launched next-generation video platform for dynamically managing bandwidth, format and resolution to enable high-quality viewing experience on any device
- Shipped 1 millionth WiMAX device; expanded WiMAX CPE product portfolio
- Conducted world’s first live 2.6GHz TD-LTE mobile demonstration for China Mobile
Enterprise Mobility Solutions segment sales were $1.8 billion, down 13 percent compared to the year-ago quarter. GAAP operating earnings were $306 million, compared to operating earnings of $403 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
- Announced the MC9500, Motorola’s most rugged mobile computer and the first to provide 3.5G WAN with support for GSM-HSDPA and EVDO Rev A wireless broadband connectivity
- Launched the MT2000 series of mobile terminals to provide the power of a mobile computer in a handheld, rugged bar code scanner – the industry’s first device of this kind
- Celebrated the 20th anniversary of the Project 25 (P25) standard and secured P25 public safety awards from Pima County in Arizona, Baltimore County in Maryland, the City of Philadelphia, and the City of Virginia Beach
- Received TETRA awards in key developing countries’ major airports and metros including Mumbai Metro, New Delhi Airport Express Link, and Urumqi Airport in the Xinjiang province in China
Fourth-Quarter 2009 Outlook
The Company’s outlook for fourth-quarter earnings from continuing operations is .07 to .09 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:
| Third Quarter |
(In millions, except per share amounts) | 2009 | 2008 |
Net sales | $5,453 | $7,480 |
Gross margin | 1,808 | 1,803 |
Operating earnings (loss) | 128 | (452) |
Net earnings (loss)** | 12 | (397) |
Diluted earnings (loss)** per common share: | | |
| Continuing operations | .01 | $(0.18) |
| | | |
| | |
Weighted average diluted common shares outstanding | 2,319.5 | 2,265.9 |
Highlighted Items
Highlighted items totaling .01 per share in net expense include a charge for an environmental reserve and costs associated with ongoing efforts to prepare for separation into two independent public companies.
Conference Call and Webcast
Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Thursday, October 29, 2009. The conference call will be webcast live with audio and slides at www.motorola.com/investor.
Business Risks
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 financial impact of the launch of new products and Motorola’s financial outlook for the fourth 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 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.
Definitions
*“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
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