SCHAUMBURG, Ill.—Financial analysts are awaiting Motorola Inc.’s first-quarter earnings report—scheduled for later today—which may exceed the company’s own projections and those of Wall Street made in the fourth quarter of 2005 when handset sales growth was expected to slow this year.
Motorola’s industry-wide megahit handset, the Razr, continues to propel sales in the United States, particularly the vendor’s CDMA-equipped handsets selling through CDMA carriers Verizon Wireless, Sprint Nextel Corp. and Alltel Corp. as well as its Razr’s sporting new colors. At the lower end of the retail spectrum, Motorola’s pursuit of emerging markets such as India with ultra low-cost handsets may be reflected in first-quarter earnings as well.
Motorola’s handset business accounted for nearly two-thirds the company’s revenue in the fourth quarter and those results are expected to carry the company, while analysts expect more modest results from the company’s network infrastructure division, its connected home solutions and government and enterprise mobility offerings. Alcatel’s pending acquisition of Lucent Technologies Inc., driven by the shrinking value of the network business, has fueled speculation that Motorola may acquire another player to remain competitive in that sector.
Motorola is in close competition with arch rival Nokia Corp. in mature markets for mobile phones such as the United States and Europe and in emerging markets such as India and China—all of which Nokia leads in sales—so analysts are also watching this week’s first-quarter earning reports for market-share and profit-margin implications for the world’s two top handset vendors. Motorola is expected to show market share gains in Europe, China and India. Nokia is scheduled to announce first-quarter results on Thursday.
