Motorola: Droid X Selling 'Extremely Well', Third Quarter Shines

Oct.28.10 | About: Alphabet Inc. (GOOG)

Roughly a year ago Motorola (MOT) basically bet the farm on Google’s Android operating system with the launch of the first Droid device. Motorola’s third quarter highlights how that bet has paid off nicely.

Motorola reported its first quarterly year over year revenue growth since 2006 as earnings handily topped estimates. The company reported earnings of $109 million or 5 cents a share, on revenue of $5.8 billion (statement). Non-GAAP earnings were 16 cents a share. Wall Street was looking for earnings of 11 cents a share on revenue of $5.66 billion.

There were a few moving parts to Motorola’s quarter. For instance, Motorola gave two revenue tallies, on excluding the network business it is selling to Nokia Siemens. Revenue from continuing operations was $4.9 billion. Motorola broke even based on continuing operations with non-GAAP earnings of 12 cents a share. Wall Street estimates included the network business that’s being sold.

With those financial moving parts out of the way, Motorola’s quarter can be summed up in one word: Droid. Motorola, which is preparing to separate into two businesses, still gets most of its profit from the enterprise business. But the mobile device unit, under co-CEO Sanjay Jha, has come a long way.

Motorola had mobile device sales of $2 billion in the quarter, up 20 percent from a year ago, with non-GAAP earnings of $3 million. The company shipped 9.1 million handsets and 3.8 million smartphones. Motorola has shipped 22 smartphones in 2010.

In a statement, Jha said Droid X “continues to sell extremely well” and noted he was optimistic about the enterprise-focused Droid Pro. On Motorola’s earnings conference call, Jha said:

Early in the month we announced DROID Pro, our first device optimized for both personal and business use. Usable in over 200 countries, it features a 1 GHz processor candy bar form factor, QWERTY keyboard and Adobe Flash 10.1. To address corporate connectivity and security needs we have added security features on top of the Android OS. This makes our devices more secure and more manageable using standard enterprise tools and technologies. As a result, we expect DROID Pro to be very competitive with other devices in the market aimed at business users.

For the fourth quarter, Motorola projected earnings of 14 cents a share to 16 cents a share. Wall Street was expecting 15 cents a share. Motorola’s projections exclude the networking business being sold to Nokia Siemens.

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