"Motorola posts unexpected 2Q profit and says rest of year will see improvement"
Motorola Inc. on Thursday posted an unexpected profit for the second quarter after several quarters of losses, and said it expected things to keep improving this year.
The Schaumburg, Ill.-based electronics company earned $26 million, or 1 cent per share, in the three months ended July 4. That's up from $4 million, or break-even per share, a year ago.
The latest results were boosted 2 cents per share by various one-time effects, but even so, Motorola exceeded its own forecast, which called for a loss of 3 cents to 5 cents per share, excluding the cost of its restructuring initiatives.
Analysts polled by Thomson Reuters had on average been looking for a loss of 4 cents per share.
Motorola's sales fell 32 percent from a year ago to $5.5 billion from $8.1 billion a year ago. Analysts were looking for revenue of $5.6 billion for the latest quarter.
"We will further improve earnings in the second half of the year," co-CEO Sanjay Jha told analysts and investors on a conference call.
For the third quarter, the company now expects results in a range from a loss of 1 cent per share to a profit of 1 cent per share. Analysts had been expecting a 1-cent loss.
Motorola shares rose 48 cents, or 7.3 percent, to $7.05 in premarket trading on news of the third-quarter forecast. The shares had already risen 58 percent this year, as investors have overcome the worst of their pessimism and have started to look for signs of a turnaround.
Motorola's sales have been on a multiyear slide, as its cell phone division has failed to come up with a product that can match the popularity of the Razr, a stupendously popular phone in 2005.
In the second quarter, Motorola shipped 14.8 million handsets, up from 14.7 million in the first quarter, but just over half of what it sold a year ago.
The profit was evidence of Motorola scaling back heavily on its costs. It has laid off 8,000 employees this year.
It is not the first time Motorola has appeared to be on the cusp of a turnaround: in the second quarter last year, it also posted a small surprise profit and reported shipping more phones than the first quarter. Its shared soared, only to lose more than half their value before the end of the year.
Motorola's non-phone divisions, which make police radios, equipment for cable companies, and other electronic gear, continued to make up for losses in the cell phone division, though their sales have also been affected by the recession. They make up two-thirds of the company's sales.
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