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Motorola Back From The Dead This Halloween
Motorola (NYSE:MOT) was not supposed to do this. The company was supposed to be dead and buried, and just another entry in the pages of American technology companies that used to matter but could not compete. And yet, here the company is - revitalized by the smartphone boom and perhaps with another chance to make a real go of it.
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Nothing Spooky About The Quarter
Motorola reported that total revenue rose 6% in the third quarter, with revenue from continuing operations up 13% to nearly $5 billion. The difference comes from the part of the networking business that is being sold to Nokia Siemens Network. Overall, GAAP earnings per share were 5 cents a share, a 400% increase over 2009 third quarter earnings. The year-over-year increase was similar in non-GAAP earnings which increased from 6 cents to 16 cents, well above the company's guidance figures.
Revenue was led by the mobile devices business, as the company's Droid phones continue to do well in the shadow of Apple's (Nasdaq:AAPL) iPhone. Motorola actually squeaked out a little profit here, something that did not seem widely expected just yet.
Can Motorola Build From Here?
The biggest challenge for Motorola is going to be maintaining momentum in the smartphone business; the enterprise mobility solutions segment is not bad, but is not likely to set growth investors' hearts aflutter. Then again, maybe this is where Motorola can surprise - the mobile computing and barcode scanner businesses seem to be doing alright, and deeper penetration into customers like Wal-Mart (NYSE:WMT) could be highly profitable.
Turning back to phones, the Droid platform is doing well. The company seems to have some good phones for the Chinese triumvirate of China Mobile (NYSE:CHL), China Telecom (NYSE:CHA), and China Unicom (NYSE:CHU), but can the company hold up against the likes of HTC and Samsung, to say nothing of what Research in Motion (Nasdaq:RIMM), Hewlett Packard (NYSE:HPQ), Nokia (NYSE:NOK), and even Microsoft (Nasdaq:MSFT) may have in store?
The Bottom Line
Motorola is certainly in the best health it has seen in a while. Then again, compared to "dead", almost anything would be an improvement. Perhaps investors in Nokia and Ericsson (Nasdaq:ERIC) can take encouragement from this and hope for their companies to once again regain some of their former glory. For Motorola, the challenge is to figure out how to produce real profits and cash flow from the mobile boom and reinvest that effectively. There are ample opportunities and avenues for growth in the technology and communication markets, and the burden is on Motorola to find and exploit them. (The early bird may catch the worm, but in shopping, the worm will come to those who wait. See 12 Ways To Shop Smarter.)
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IN PICTURES: 20 Lazy Ways To Save Money
Nothing Spooky About The Quarter
Motorola reported that total revenue rose 6% in the third quarter, with revenue from continuing operations up 13% to nearly $5 billion. The difference comes from the part of the networking business that is being sold to Nokia Siemens Network. Overall, GAAP earnings per share were 5 cents a share, a 400% increase over 2009 third quarter earnings. The year-over-year increase was similar in non-GAAP earnings which increased from 6 cents to 16 cents, well above the company's guidance figures.
Revenue was led by the mobile devices business, as the company's Droid phones continue to do well in the shadow of Apple's (Nasdaq:AAPL) iPhone. Motorola actually squeaked out a little profit here, something that did not seem widely expected just yet.
The biggest challenge for Motorola is going to be maintaining momentum in the smartphone business; the enterprise mobility solutions segment is not bad, but is not likely to set growth investors' hearts aflutter. Then again, maybe this is where Motorola can surprise - the mobile computing and barcode scanner businesses seem to be doing alright, and deeper penetration into customers like Wal-Mart (NYSE:WMT) could be highly profitable.
Turning back to phones, the Droid platform is doing well. The company seems to have some good phones for the Chinese triumvirate of China Mobile (NYSE:CHL), China Telecom (NYSE:CHA), and China Unicom (NYSE:CHU), but can the company hold up against the likes of HTC and Samsung, to say nothing of what Research in Motion (Nasdaq:RIMM), Hewlett Packard (NYSE:HPQ), Nokia (NYSE:NOK), and even Microsoft (Nasdaq:MSFT) may have in store?
The Bottom Line
Motorola is certainly in the best health it has seen in a while. Then again, compared to "dead", almost anything would be an improvement. Perhaps investors in Nokia and Ericsson (Nasdaq:ERIC) can take encouragement from this and hope for their companies to once again regain some of their former glory. For Motorola, the challenge is to figure out how to produce real profits and cash flow from the mobile boom and reinvest that effectively. There are ample opportunities and avenues for growth in the technology and communication markets, and the burden is on Motorola to find and exploit them. (The early bird may catch the worm, but in shopping, the worm will come to those who wait. See 12 Ways To Shop Smarter.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Stephen D. Simpson, CFA
Stephen D. Simpson, CFA, is a freelance financial writer, investor, and consultant. He has worked as an equity analyst for both sell-side and buy-side investment companies in both equities and fixed income. Stephen's consulting work has focused primarily upon the healthcare sector, while he has also written extensively for publication on topics pertaining to investments, security analysis, and healthcare. Simpson operates the Kratisto Investing blog, and can be reached there.
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