As expected, Motorola Inc. reported a strong fourth quarter on an upsurge in its mobile-phone sales-numbers good enough for the company to reclaim the No. 2 position in worldwide handset market.
However, Motorola’s stock dropped more than 7 percent after the news to about $16.18 per share. Industry analysts said the drop was due to Motorola’s relatively conservative outlook for the first quarter, as well as fears that the company would not be able to continue its strong momentum in 2005. Indeed, three investment firms downgraded their opinions on Motorola’s stock following its fourth-quarter report.
In the fourth-quarter Motorola posted sales of $8.8 billion, a 27 percent increase from the $6.9 billion it reported in the same quarter a year ago. The company reported net earnings of $654 million in the quarter compared with $489 million in the same quarter last year.
“We are extremely pleased with the increases in sales and earnings we achieved this quarter,” said Ed Zander, the company’s chairman and chief executive officer. “The results reflect our renewed sense of urgency around quality and customer satisfaction and the ability to provide world-class, compelling new products. The response from customers worldwide to our portfolio of new products and technologies continues to be enthusiastic and is giving us market-share growth in several areas. Importantly, the market-share resurgence of the Personal Communications Segment in the fourth quarter strengthened Motorola’s No. 2 position in the wireless handset industry.”
Motorola is in a tight battle with Samsung Electronics Co. Ltd. for the No. 2 position in the worldwide handset market. In the third quarter, the company sold fewer phones to end users than Samsung, although it shipped more phones to carriers than Samsung. Thus, Motorola had more phones in the pipeline at the start of the fourth quarter than Samsung.
In the fourth quarter, Motorola shipped 31.8 million handsets, up 42 percent from the same quarter a year ago. Motorola reported sales in its mobile-phone business of $4.9 billion, up 51 percent from the same quarter a year ago. The company’s earnings were $526 million, up from the $127 million it reported in the same quarter a year ago.
In its Global Telecom Solutions segment, Motorola reported sales of $1.4 billion, up 2 percent compared with the year-ago quarter. The segment reported operating earnings of $281 million, compared with $138 million in the year-ago quarter.
Motorola predicted it would score sales of between $7.5 billion and $7.9 billion in the first quarter. An average of analysts polled by Thomson First Call predicted the company will report sales of $7.6 billion in the first quarter.