Wednesday, January 27, 2010

Motorola Inc. (NYSE: MOT): Q4 Earnings Preview 2009

Motorola Inc. (NYSE: MOT) is scheduled to release its fourth-quarter financial results before the market open on Thursday, January 28, 2009. Analysts, on average, currently expect the company to report earnings of 8 cents a share on revenue of $5.94 billion. In the year ago quarter, the company reported a loss of $0.1 per share on revenue of $7.14 billion.
Motorola, Inc. offers technologies, products, and services for mobile communications worldwide. It operates in three segments: Mobile Devices, Home and Networks Mobility, and Enterprise Mobility Solutions.
Late in November, the Schaumburg, Illinois based company reported that it swung to third quarter profit of $12 million or $0.01 per share, compared to a loss of $397 million, or $0.18 per share, in the same quarter last year. Revenue plunged to $5.45 billion from $7.48 billion in the prior year quarter. Analysts, on average, expected the company to report breakeven per share for the quarter on revenue of $5.54 billion.
Gross margin for the quarter was $1.81 billion or 33.2% of total sales, up from last year's $1.80 billion or $24.1% of total sales a year ago. The company reported an operating earnings of $128 million, compared to last year's loss of $452 million.
For the fourth quarter, Motorola said it expects earnings from continuing operations, excluding items, to be in the range of $0.07 to $0.09 per share.
The company has been able to improve its performance through its continued focus on cost-controls. In October, Motorola said that it has increased cost reduction plan by $100 million, and now expect total cost savings of $1.9 billion for 2009.
Motorola is working to revitalize its once mighty handset business, and is betting heavily on new Android phones to do it. In November Mtotrola released its Android-based smartphone Droid to take advantage of the holiday season, when wireless-phone sales traditionally peak. According to Flurry, a mobile applications’ specialist, the opening-week sales figures of the new smartphone reportedly stood at almost 250,000. Analysts at Oppenheimer & Co. have estimated that Motorola sold about 1.2 million Droids during the holiday season. Recently, Verizon's CFO John Killian on it's earnings call said, that “the Droid has been extremely well received." Few industry experts believe that the Droid might be the most successful phone launch for Motorola since the Razr.
At the recently concluded Consumer Electronics Show in Las Vegas, Motorola unveiled a new wireless device named Backflip, which features both a touch-screen and keypad similar to the company's latest offering.
Motorola has postponed plans to spin off the cell phone unit, but media reports have suggested that the company has been looking to sell its largest division, Home and Networks Mobility, which makes TV set-top boxes, cable modems and related gear. The company has refused to comment on the media reports.
On Thursday's call, analysts will seek details on Motorola's complicated partnership with Google. Though Google has professed continued support of Motorola, its recent moves, including the launch of smartphone Nexus One, could hurt the handset maker. Also, Google's confrontation with the Chinese authorities could harm Motorola, too.
The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 21.76 and PEG Ratio (5 yr expected) of 50.14. In terms of stock performance, Motorola shares have gained 53 percent over the past year.

Full Disclosure: None.
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