Good afternoon and thank you for holding. Your lines have been placed on a listen only mode until the question and answer session. Today's call is being recorded. If you have any objections please disconnect at this time, I would now like to introduce Mr. Ed Gams, Corporate Vice President, Investor Relations. Mr. Gams you may begin.
Ed Gams, Corporate Vice President, Investor Relations
Good afternoon, with me on this call are Ed Zander, Chairman and Chief Executive Officer at Motorola; and David Devonshire, Executive Vice President and Chief Financial Officer. Joining us for the Q&A portion of this call are Ron Derricks; President of the Mobile Devices business; Greg Brown, President of the Government and Enterprise Mobility Solutions Business; and Dane Maloney, President of the Click-at-Home business. An Internet slide presentation is accompanying this conference call. The presentation can be viewed by visiting www.motorola.com/investor. The slides will be advanced automatically as our presentation proceeds. We strongly encourage you all including those listening on the telephone to also view these slides while you listen. A replay of this webcast including questions and answers will also be available at approximately 8:00 PM today. A number of forward-looking statements will be made during this conference call.
Forward-looking statements are statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola and there can be no assurance that these expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties Motorola's actual result could differ materially from these statements. Information about factors that could cause and in some cases have caused such differences can be found in today's earnings press release on pages 70 through 80 of Motorola's Form 10-K for the fiscal year ended December 31st 2004 again and then Motorola's other SEC filings. This conference call is occurring on the afternoon of January 19th, 2005. The contents of the conference call contains time sensitive information, that is accurate only as of the time of the slide broadcast. If any portion of this conference call is retransmitted at a later date Motorola will not be reviewing or updating the material that is contained herein. This conference call is the exclusive property of Motorola Inc., any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Motorola is strictly prohibited. Now I'd like to introduce Ed Zander.
Edward Zander, Chairman, Chief Executive Officer and Chairman of the Executive Committee
Thanks Ed and good afternoon everyone. Once again we are very pleased with our performance during the past quarter. We also feel very good about the results for all of 2005 and I would like to publicly thank all of our hardworking employees worldwide who made it happened. We continue to deliver on our commitments to profitably grow market share with exciting products and increasing levels of customer satisfaction. Our key financial metrics including revenue growth OE ratio to sales, revenue per employee, operating cash flow and inventory returns continue to improve year-over-year. And probably we are pleased to see even more is the many in engagements with our customers worldwide are on our vision of seamless mobility. Once the series of slides and you see here our vision which was they do two years ago at the GSM World Congress is rapidly becoming the center of discussions and strategic thinking among cable wireless, wireline operators, governance and enterprises in every geography. No other company other than Motorola had in one customer meeting engaged in a conversation about implementing the seamless mobility experience, and the industry as a whole, we are deploying the auto in the person, and how that's going to differentiate us from our competition going forward.
Mobile Broadband Internet is the next big thing, and we think we can play as usual in defining the market and making it a reality. Now let me give you some key takeaways for the quarter in 2005. First, we had record company sales for any quarter posted to $10.5 billion, up 18% from the year ago. For the year, 36.8 billion up 18% in 2004, that's 5.5 billion incremental revenues in one year. Second we had quarter 4 EPS of $0.35 including significant items mentioned in our press release, which were up 30% year-over-year.
Third, we once again achieved our over 12% quarterly operating margin. 12.5% to be exact, excluding significant items mentioned in our press release. We now have data above 11% OE for 4 in the past five quarters. Comparatively for the year, we ended up in 11.8% up from 10.3 in 2004. We are moving closer and closer to our target we set out at our Analyst Meeting last year. Once again, record net cash for Motorola 10.5 billion, we generated 4.6 billion in operating cash flow including 0.5 billion from Telsim.
And mobile device was more records once again. 44.7 million units up 40% from Q4 2004 and up 15.5% from Q3. Units for the year 146.0 million, up 40% from 2004, that's a biggest percent increase of anyone in the industry. For the quarter, mobile device market share is up 20 percentage points from this time a year ago and up about 0.5% quarter-to-quarter to now 19%, and we further just in start sales for No.3, No.4 and No.5. We also achieved in mobile device 11% only again excluding significant items mentioned in our press release demonstrating growth for profitability and finally for all of Motorola we see more growth ahead. The quarter was not without challenges.
First, while we shipped 26 new mobile device products during the quarter, we can actually sell all the demands of some of the products in the marketplace to the supply constraints. It should not be an issue going forward. And secondly, we've not achieved our goals for revenue in the networks business, although we did meet our operating margin target. We still feel we can grow the networks above the market forecast in 2006 more of our properties later. Finally a few other things. Supply-chain initiatives are making progress. There is no doubt now without the significant improvements in this area, we would have been severely challenged to handle the mobile device volume increases in the past two quarters, more progress and efficiencies to come.
And our new investments over the past two years was very deploying increasing well in our future, and it includes the mobile internet with 802.16 and OIT networks (ph) Broadband to the home with IPTVO, fiber to the premise and Voice Over IP. Next Generation product safety with mission critical data video security in this technology, mobile enterprise improved devices to co-experiences with multimedia content convergence, and next generation service delivery infrastructure platform with SoftSwitch and IMS. And finally connecting the unconnected, the divestment scenarios like Brazil, Russia, India and China. In summary it was a great quarter and a great year, now on Q1 in 2006, Dave.
David W. Devonshire Chief Financial Officer and Executive VP
Thanks very much, Ed. One another very, very strong quarter and earnings growth and record sales. Sales are up approximately 18% versus a strong fourth quarter in 2004. Our quarterly earnings per share results from continuing operations were $0.47 per share compared with $0.28 per share in the fourth quarter of last year, an increase of 68%. For the full-year sales were up approximately 18%.
Our annual earnings per share results from continuing operations are $1.82 compared with $0.90 per share in 2004, an increase of 102. In terms of the reconciliation of our non-GAAP items, EPS, earnings per share include the number of significant items showing here and listed in our press release, which aggregate to a combined impact of $0.12 per share of income. Earnings per share for the fourth quarter of 2004 included several significant items also shown here which aggregates the combined impact of $0.01 per share of income, excluding these items and our results from both periods earnings per share in the current quarter will be $0.35, up 30% versus last year demonstrating excellent earnings leverage on our sales growth of 18%.
Looking at the quarterly trend for all quarters of the year in sales, you can see that we have achieved a solid topline growth in every quarter. There is another measure of productivity we focused on revenue for our employee. Our revenue per employee continues to improve with the gain up 15% in the past year and that's improved by over 50% since 2003. They remained focused on making further productivity improvements in the future.
Our operating earnings margin continues to show steady improvement on a year-over-year basis. In the quarter operating margin rose 530 basis points compared to Q4 last year. Excluding those significant items discussed earlier, Q4 operating margin will be 12.5%. We’ve generated over 11% operating margin for the last five quarters. For full-year 2005, operating margin would be 11.8% versus 10.3% in 2004 excluding significant items from both years such as the sales and collection, reorganization charges and other items discussed in each of our quarterly earnings releases. This demonstrates that we are making steady progress whereas achieving our long-term operating margins up 13% to 15% while at the same time growing faster than our competition.
Our cash flow performance in the quarter was outstanding. We generated over $2 billion in operating cash flow including $500 million from Telsim. This is our 20th consecutive quarter of positive operating cash flow. Capital expenditures were approximately $200 billion in the fourth quarter giving us free cash flow of approximately of $1.9 billion. Our adjusted total capital ratio has now decreased to 20.3% from 28.4% at the end of 2004 making progress towards our goal of less than 20% by the end of the first half of 2006. We ended the fourth quarter with $10.5 billion in net cash deposits up $2.1 billion during the quarter and about $5.1 billion for the full year.
Now I must state about our share repurchase program, during the third quarter we purchased approximately 60 million shares, with an average price of $22.40. In subsequent date we purchased approximately 41.7 million shares for approximately $870 million. In terms of guidance, we want to point you that we're going to begin a transition, such a different form of providing guidance. Effective with our July conference call we will no longer be providing guidance on earnings per share. Other technology, companies have taken similar steps and many have never provided to begin their earnings per share guidance. We will continue to provide sales guidance. In place of earnings per share guidance we will be providing other information to assist investors in their financial modeling. The nature of this additional information will likely evolve over time. Starting today I am sure you will notice an increased level of both industry commentary and Motorola's specific commentary that has not been provided in the past.
Our guidance for the first quarter is for sales up between 9.3 and 9.5 billion up in the range of 14 to 16.5% versus the first quarter of '05. Our guidance for the first quarter EPS range of $0.27 to $0.29 per share excluding stock option expense of $0.02 of one increase that is 32% versus the first quarter of '05 excluding the gain on the sale of investments in that quarter, again showing excellent leverage on our sales growth. Our first quarter tax rate is estimated to be in the range of 36% and the number of shares outstanding is expected to be about 2.56 billion shares.
Further comments on 2006 as we told you last quarter, our estimated annual stock option expense is between $250 and $300 million spread evenly by quarter. We do expect addition collection related to Telsim in the first half of 2006. As I mentioned, our effective tax rate for 2006 will be approximately 36%. We expect further improvement in operating margins versus 2005's operating margin of 11.8% excluding the significant item I discussed earlier. Thank you very much for your time and I will turn the meeting back over to Ed.
Edward Zander, Chairman, Chief Executive Officer
Thanks Dave. I will now go and give you some insight and some colors on each of the businesses I do have, some of the business general managers there for the Q&A that can hopefully answer some of your questions, if I don't cover something. First mobile devices, Motorola's team once again hit the ball out of the park. As I said earlier, all-time Motorola records in unit sales, operating earnings we increased market share gain and in a lot of great cool and compelling products, so we are really excited about the performance. RAZR is now the best selling clamshell handset in the world. The Slither L7, L6 were ahead in three defining candy-bar experience in our thin platform RAZR and Slither is on a role of nearly 13 million units sold in Q4 alone. Keep in mind that new products such as EVDO and new MTS RAZRs, Slither L6, L7 and pebbles are all in the early stages of marketing production. Feedback from our customers and consumers is very positive about these editions.
We are also expanding our position in new MTS with units shipments up 87% compared to Q3. We also had a healthy and robust demand quarter for the iDEN products and are strengthening our position across price deals in high growth markets by leveraging our GSMA wins. We continue to innovate across technologies and price tiers with new headsets for GSM, CDMA, UMTS and iDEN. And as you can see, we had a market share momentum. We now have -- we believe based on the TAM 19% global market share, if you could remember, about a year or 15 months ago around 30, we are now the clear number 2 and gaining, #1 in North America, #1 in the Latin America, the #2 in North Asia and #3 in high growth markets.
In terms of the financials, a year-over-year basis, first of all once again we grew market share and increased operating earnings on a year-over-year basis, sales up 30% operating earnings up 25%, operating margins is in double digits, and we factored out the charge related to the past tubes of the Codec IP, the margins was a solid 11%, unit shipments are up 14%, outpacing all major competitors, Motorola shipped 64% more units than Samsung during Q4, and it's 447 units Motorola shipments may equal those of both Philips and then LG combined for the quarter. Unit shares were up again across all technologies with GSM units comprising about 70% of all Motorola units shipped. Market share was up both year-over-year and sequentially. As I said we estimate our current position at 19% based on the total adjustable market of 235 units during the quarter.
Overall our ASPs were up almost 3% compared to the prior quarter, and during Q1 we expect to deliver solid ASP performance as a result of increased volumes than new products, Slithers, the Pebbles as well as the expansion of the link of family and a launch of new exciting products such as "Q"
And turning to channel inventories, during the quarter four worldwide channel inventories continue to remain below industry averages and inline with current demand in each region. For the full year of 2005, Motorola devices currently had a great year, 25% higher sales, 27% higher operating earnings margin increased to 10.7% for the year up from 9.9% and significant items excluded and 40% higher shipments.
In terms of the global share we are now clear number 2 in gains, the overall market continues to be healthy, we can continue the opportunity for profitable growth, investment in 3G areas. First R&D that delivers new product designs and new experience is based on 3G and 4G technologies, that can be standard deployment of our Linux plus Java platform, and third new innovative marketing campaigns to create excitement for new products worldwide are focused on looking into core component products are driving growth. Now I will just take a look out of few in around the world.
#1 North America, in Quarter four, clear #1, RAZR is the most desired handset for GSM, CDMA and we launched the EVDO RAZR, in America is a quarter ahead of plan. And now Pebble and Slither are starting to ramp and rolling out. So, as we complete the transition of both our GSM and CDMA portfolio in North America, we see a lot of opportunity to strengthen our leadership position. Latin America continues to be strong market for us, and #1, RAZR the B170, C150 are very popular with the consumers in this region. Now in North America, this transition nearly completes our handset portfolio we expect to drive solid gains across price tiers in Q1.
Europe continues to be great start for Motorola where we continue to expand and build upon a much-improved position and rough about five share points versus Q4 2004. We expect further gains across price tiers in GSM, as products such as the Slither and Pebble for our momentum and excitement for our brand. And UMTS demand is taking off with the products such as RAZR V3X driving interest and excitement for 3G.
Good story North Asia, with improved position we now believe we are new #2. RAZR is ahead and CDMA GSM and our Linux plus Java PDA lineup is a new success for consumers. Additionally, our focus on new channel distribution is clearly making a difference and excited about the prospects moving forward. Finally in the high growth markets, Middle-East Africa, India and South East Asia, we remain the #3 handset company.
We continue to invest for growth and build momentum, we're gaining strength across price tiers and while it is true that our role in GSMA drive to connected as queue for handset demand in the sub $40 price chip has a robust demand in the region for RAZR and SLVR L6 phone. In fact India is among our top price market for Asia. In terms of the products again raises the story its safe to say that 2005 was the year of the raiser just with consumers all over the world, and during this quarter we expanded the family, many have asked me what’s have, I keep saying its more raisers, we just announced a whole flow of exciting products, our new EV-DO model for North America, the RAZR V3c, we didn’t stop there, we launched the ENPS version in Europe.
We rolled out pink models and blue models and limited exclusive goals with (indiscernible) and there is just more to come across the whole range of family, but we get more than that. We commit to reinventing each of the six primary phone factors of designing new and exciting mobile experiences. For example we launched a number of new products that must haves on both on the common reach of platform. We debut the L6 in India, a symbol of the importance of this rapidly growing market. We launched PEBL in Hong Kong, a hot bed and it’s not among the world’s fashionable. We transformed the law and we just hit the city with the launch of L7, a major set fold and our drive to really envision the advance and reinvigorate the pop song factors. Every one of these handsets have limited offers to the global market, and we are very excited by the consumers thoughts. Of course if you look at the Motorola, we have got a course suite of products in our mid-tier, we have got clear lead of shipments in need of headsets in comparing new products. Highstore (Ph) in 2005 Motorola was named by the GSM Association to lead the way and its drive to connect (indiscernible) connected. As a result demand is growing from all over across price tiers in the world’s high growth markets. This year semi program is very important, for the industry’s consumers and developing world by providing a profitable access to wireless communications, doors are opening to economic development and opportunities. This is good news story, that’s only get better during 2006 so watch this space.
Looking ahead we are out to a great start in you know the first 20 days, you know we are 15 days in 2006. At the consumer electronics show in Las Vegas we launched a new number of exciting notepads for this year, an expansion of our ROKR family from Mobile Music that are great product the ROKR E2 and the addition of music streaming stereo hardware, we have own ROKR, the Burton products and a whole bunch of other things we got out and announced there, we are creating new and exciting experience to consumers.
And we are also defining and delivering rich experiences that can help generate increased ARPU and driving evaluated services. At the CES we have three new alliances, feature and festivity brands in those sect of markets. Two years ago I am not sure we never have a slide like this that had three major partners, first announcing this Motorola Google to Google Search, product to local engine, and Yahoo to mobile messaging and more. Clearly we are working to raise the bar not only for handset device, but also rich experiences to improve devices and (indiscernible) experiences. Stay tuned, there is a high season of tradeshows there is more to come. There is also tremendous interest and excitement is building up for a new must have for Motorola, coming soon for consumers who want a true laptop alternative, its called Duo, that have features to download, enable practical view time anywhere productivity, the data, it images your e-mail and more on too. So we are out to a great start in 2006, expansion of the ROKR family, stereo iWARE, the small Bluetooth headset, power four alliances for rich experiences on our new stated recording productivity. So what are the mobile devices subjective to 2006? 1) Grow market share profitability, 2) Adequately comparing products with less experiences and with quality and efficiencies, and we need to focus on these objectives and delivers profitable market growth. Our guidance for Q1 2006 for mobile devices, we expect our mobile device presence to generate an increase in units, market share, sales and operating margin versus a year ago. We also expect less than a normal seasonal decline in unit shipments sequentially versus Q4’05, and to begin this year there is a whole effort, we approximately 800 new units shipped in 2005, we expect an industry growth rate of about 10-12% in 2006.
I also failed to mention earlier, in 2005 we did some of the devices had some demand for some of our products that across the supply constraints we weren’t able to fill, we don’t believe this is going to be an issue in Q1. Now turning to government and enterprise mobility, Greg and his team really had a great quarter. Sales in the quarter were up 8%, sales to become an enterprise markets were up 11%, well automotive sales were relatively flat but improved sequentially, operating margins improvement was driven by increased sales and improved gross margin percentage resulting from cost reductions in favor of product mix, excluding significant items discussed in Q4 2004 operating margin improved 3.3 percentage points and earnings were up 41%. We are the leader in bringing mission critical rounds to mitigation solutions for enterprises worldwide. Globally there continues to be an emphasis on homeland security and communications solutions, that delivered 3-year operability, critical networks, and mission critical data. It would be a double-digit sales growth for mission critical, wireless communication solutions in the fourth quarter including significant orders shown here.
Clearly, it may not look like arrangement but is just as we cited, the first responders an extension of our Seamless Mobility vision to first respond as we launched the first ever personal digital assistant to operate on private tech of networks, and I know Greg been so exciting. It provides public safety use as pocket size actions to essential two-way data applications while they are on the move, you can access personal records, report crimes and accidents and issue citations by the PDAs and application suite. Also had strong momentum for our mesh networking technologies, there is a lot of opportunity, the praise for new orders in the quarter and 10 new customer including United States (indiscernible) Energy. In addition we shipped the new 4.9 GHz MOTOMESH Multi-Radio Broadband network, which leverages the newly licensed 4.9 GHz public safety band. In the enterprise communication space we’ve made a small but strategic acquisition of Wireless Valley Communications, a provider of leading software solutions that enable efficient and effective design and management of wireless networks, and here again, Greg has two way going out since this quarter.
We introduced the T7000L, I have to give it a better name, which is already into the commercial-off-the-shelf mobile computing market, something we needed for sometime. The HC-700L is designed to meet the rigorous demands of mobile work forces in a variety of industries including utilities, expectation, logistics, public works, public services and manufacturing. By date the mobile paid out applications, which is remote database entries, job ticketing and field service. Those force automation asset industry management. So the enterprise business is starting now, we are starting to get the products and we are going to move out in this area. All of our business was profitable in Q4.
We are continuing our strong emphasis on operational cost improvements, while also continue to remain focused on innovation and delivering and customer programs. In Q4, new automotive lifetime sales award exceeded a billion and finally our guidance for the GEMS business as sales in operating earnings up versus the prior year. An aging barrier in the network business as I said earlier the results in this business were mixed. Sales were down versus our forecast as we had higher than anticipated deferred revenue at the end of the quarter associated with future performance on open customer contracts. Deferred revenue at the end of 2005 has doubled since the beginning of the year. We do not believe this decrease of sales is vindictive of what will occur in 2006, and that backlog starting 2006 is up about 5% versus the starting backlog of 2005 as global demands to our wireless solutions remains solid. More on 2006 in a minute.
Operating margins was so strong at 15.1%, remember we target this business from a 13 to 15, which is relative to last year’s very strong margin across 18% due to increased R&D and selling and marketing expense to invest for the future growth. We again experienced sales growth in Q4 and the emerging businesses however within the segment, including wireless broadband and wireline solutions, and here are some of the examples. The CDMA EV-DO award for VIVO in Brazil. Four new prior to the presence awards, VIVO in Taiwan which is an Ireland-wide launch of UMTS. A little award but I think a big one for the future in Macedonia, a Nationwide Network, they are now using our Canopy technology, which is the bidding of what we are going to see with 4G. That was announced I believe yesterday. Today Earthlink announced they awarded to Motorola a metro life-like Canopy agreement for Adobe and around other cities, another key data point. For Q1 we expect sales and operating earnings to be down versus the prior year, once again to the higher levels of deferred revenue than a year ago. The full year 2006 we expect the wireless infrastructure industry to have mid single-digit growth.
Motorola’s wireless infrastructure sales are expected to grow at least at the industry rate and we also expect strong growth in emerging broadband, wireline and core networks business, approximately break this at half of our total segment growth in 2006. Operating margins for 2006 is expected to be in the 12-15% range as we said earlier. And finally Dan did another great job in just improving the operating efficiency of connect-at-home sales were slightly up for the quarter due to increased demands for advanced HD DDR set tops, operating earnings were up 40% from quarter four last year as we can achieve with cross curve and the dual DDR set tops and operating margin was up 250 basis points versus Q4 '04. In the three areas, in this business let me give you some highlights because it is important about where the home is going, where the next generation of broadband is coming into the home, first digital video and advanced set top boxes for the first time since 2001, Motorola shipped 6 million digital set top devices during the year. HD DDR set top shipments nearly doubled year-over-year to almost $3 million. And Motorola technology has fueled the digital transition in Latin American clearly with shipments to leading operators to Brazil, Mexico, Columbia and the Bahamas. Most recently in VTR Chile's largest operators selected Motorola's DDR platform for the national launch.
And Telco TV which is a next revolution video, Verizon continues to expand its FiOS TV developments in Texas as well as recently announcing deployment plans in Virginia and Florida with our all-digital VoIP set tops. The first all digital set tops, build in home media network, and we continue to look very closely with the new AT&T and support of their IPTV plans. And finally IP voice, which I've exploded in growth, Motorola shipped more than 0.5 million voice modems during the quarter bringing the cumulative number to approximately 2.5 million. The support of exploding growth of VoIP services, we expanded our technology portfolios to new exciting alliances. One with (indiscernible) networks and module of cable modem determination system development, and required advanced frequency technologies from broadband innovations strengthening Motorola's module cable modem termination system.
And finally, a couple of weeks ago, couple of years ago actually we announced the acquisition of Printel, in Europe which will help us to live with smaller in Europe because it is a footprint in Europe and helps us to expand our IP video position. In Q1 we expect sales to be flat. Operating margins to be up versus the last year. And finally like I do every year, I will leave you with some of our priorities and some of these are similar to what they were last year.
First continue to provide which you heard here not only in Enron's area but in all the areas, while products focusing more into end-to-end solutions how we can bring this next generation of broadband wireless, making it real.
Second continue to script in financial performance, we have not yet hit our goals that we told we about in our Analyst Meetings and we are moving in the right direction on revenue, on O/E, on market share, we continue to have focus on that. Moving from customer satisfaction which I think in the last two year to the customer delight, I think we made great progress in 2005 and now it is time to take it to the next level, fourth market share, and impart leadership around seamless mobility, supply chain efficiency, Steve and his team together with the divisions are working really hard this a core competency of the company in every aspect of our area operation.
And finally continue to refine and execute our most strategic direction, there are many things we still want to do and in many years we are still want to prove our influence over strategy. With that thank you very much and I will turn it back to Ed.
Ed Gams, Corporate Vice President, Investor Relations
Now before we take your question, we would like to ask each of you please limit yourself to one question and avoid multiple part questions. We only do this to help ensure that in the limited time available as many of you as possible have the opportunity to ask a question. The cooperation is greatly appreciated. Operator please advise our audience on how to post their questions to us.
Operator Instructions Our first question comes from the line of Ittai Kidron from CIBC World Markets. Please proceed with your question.
Q - Ittai Kidron
Yeah, hi guys. I hope you can help me connect this out between the supply issues that you have during the quarter and the gross margin. If you could provide any color on the supply exactly and what components, was it component, was it manufacturing, what specific products have been delayed because of this and what relationship that has that impact from gross margin?
A - Edward Zander
Sure. Is that, I will give it to Ron, who probably have more details. First it was -- first of all, with the Ron's dismiss and it was some of the new products and it was, you know mostly around, I think the supply chain is actually doing a phenomenal job in terms of you know 45 million units versus 28 million units a year ago, 38 units in the previous quarter. So, it's starting to see how we ramp this thing up in just 12 months. But, it was some short-term things that we add new products that we launched 26 of them. By now (indiscernible) you know, maybe you can provide some color here.
A - Ron Derricks
Sure. We have launched 26 new products in the quarter, and when we launch a product in the quarter, we traditionally like to see about 750,000 units in that first quarter. In some devices like the G3, CDMA the i870 on iDEN technology with Slither L6 and net (indiscernible) of our ability to ship that in the first quarter. Specifically three products we weren't able to get the volume that we would have up like to have gotten, and all three of them, one that being accustomed basically mechanical components. And the G3 access with UMTS and RAZR it couldn't get us many class, because we really want to be able to get to ramp that. We solve that problem and it's ramping high now in Q1. The L7, the keypad in the front in that key, that mechanical component couldn't get as many as we wanted. We solve that problem here in Q1, and specifically in the Pebbles the unique self-opening hinge, which is very custom. We couldn't get as many PEBL hinge as we'd like to we also solved that problem and things are ramping well so, no strategic selling components across any of the devices specifically custom mechanical components.
A - Company Speaker
So, you know it's hard to answer your question that's according to him, and how many more we could have shipped and what have went to gross margins just suffice to say, we had a couple more days. It's just very complex IT. I said that in a minute here now this is my third year we would not have been able to ship 45 million units. I don't think, we got over 26 new products across all of the geographies two years ago. So, the great job but we would -- we have three of the products that we met a lot of demand so that we just could fulfill. But they're up and running right now as Ron said, so we don't work on it and take that off the table and we are prepared to go out and, you know going to the market this quarter.
A - Ed Zander
Next question please.
The next question comes from the line of Mark Sue from RBC. Please proceed with your question.
Q – Mark Sue
Thank you. The channel inventory is low and there's less seasonality and you're very confident on the new products but I think, some folks were expecting a little bit more on the guidance. Can you just help us understand the variability to largest moving composites as the increased competition maybe from the less of BenQ, Siemens or maybe see that just from an infrastructure business? Thank you.
A - Ed Zander
We didn't get guidance, specifically on Ron's business, keep in mind, first of all the guidance we gave I thought that shows a healthy revenue growth as Dave pointed out in fact it is slightly about first call. We also have a down guidance in the networks business. So, you have to really factor in all of the features in our business, and I'm not going to get into specifically the actual numbers for Ron. Surprise if we say what we said with Ron, what we said to the last bunch of quarters we expect to gain market share, grow revenue and we'll have to just see, with that we also said that the seasonality that's been in the last several years if it's turned that Q4 to Q1 we expect to see less seasonality this quarter. But I am not going to give into that how many we're going to do usually pretty good about all product line.
A – Ron Derricks
Next question please.
The next question comes from the line of Hasan Imam from Thomas Weisel Partners. Please proceed with your questions.
Q – Hasan Imam
Thank you. Ed you granted 2005 as the year RAZR, and you know certainly the sales of RAZR has been key to your unit growth and it's the expansion and their market gains. The question is we are starting to see some slim phone offerings from other vendors like Samsung, how long is a lead do you think RAZR has going forward before competitive offerings start eating into demand, and by then, can Slither on table pick up enough to maintain growth? Thanks.
A - Ed Zander
I think we got to let you know your numbers that you're talking and in the market share I think you got to pick one up as the competitive price and take a look at them and judge for yourself because people having voted already I think we're out selling and clear in fact, their own product so, and I am not going to see there. I take this opportunity very seriously always have. We've got a fantastic product line. I don't think as anyone like it and I am just told that, we just introduced 26 new ones not likely been going black RAZRs for the last year. We've got 26 new products and I think you're going to see more this year. So, I meet the year of 2005 was raised during the year of 2006 is more RAZRs. And RAZRs meet all kinds platforms, Slithers and Pebbles and 3Gs, Skews and mid range, and let us not forget the low end, again I think you got to stay focused, it is nice that competitors are following us, I would rather have it that way, I rather set the agenda, set leadership, that is what consumers want because I got that and I think we know where everybody is going but again we take things seriously, we've been looking at the competition and we don't think right now that we do think that the parts that we have out in the market place are good in the year and we think our planning will continue, I don't run wide.
A – Ron Derricks
I think when you look at the RAZR, we have not taken RAZR into both the candy bar and the Rotato form factor, additional in 2006 we'll see RAZR, into the PDA, the flyers and Rotato form factor. In addition you will see us expand across all of the different technologies whether it is CDMA 1x DO or Edge or UMTS and a host of other technologies as well. The exact same time the volume that we are driving give us a significant cost advantage on that platform versus anybody else coming in years later trying to copy it. Also the unbelievably talented engineers we have across the world working with Motorola labs is already working on the next platform which is scalable and launching products on that as well as platform after that. We are comfortable with the RAZR platform and it's extensions and I am really excited about the next stuff and unlike future years, we will show with scalable platform and the products the day before we launch them.
The next question comes from the line of Christin Armacost from SG Cowen & Co. please proceed with your questions.
Q - Christin Armacost
I think, can you give us a number of the UMTS handsets shipped and would it be fair to say that the products that were delayed were somewhat either higher ASPs or margins?
A - Gregory Brown
When I look at the UMTS portfolio, in Q4 we launched a new low tier the E770 and new mid tier E1070 and the new high tier the V3X. They are all higher ASP devices than the typical GSM portfolio as the UMTS infrastructure that is still coming down the cost curve, we were 87% more units in Q4 than we were in Q3, we haven't given a specific number of units in Q4.
A - Edward Zander
Alright Christin, I know you didn't, try some word, delayed I think we shipped, the good news is we shipped all prices products, some case we had more demand and then again we probably would have forecasted so let me be show if you able to understand that years past we might have not shipped, we did ship.
A - Gregory Brown
Ron did identify the three products and the three reasons in each case, why the supply chain fell short of what we needed in the quarter, to satisfy the orders during the quarter.
The next question comes from the line of Daryl Armstrong, Citigroup. Please proceed with your question.
Q - Daryl Armstrong
I would like to talk a little bit more about the Slither (ph) based on the markets where you expect to roll that product out do you think it is reasonable to expect that typical little product we will have same type of trajectory that we saw with the RAZR in it's first 12 months and based on the conversations that you have with the service providers and channel are you expecting to get the same level of promotional support to the Slither (ph) that you got for the RAZR initially.
A - Gregory Brown
When you look at the Slither family there is three devices there is the L7 which is the high-end device, there is kind of mid tier the L6 and the low tier which is the L2. From a platform of products we expect that platform of products to ramp at the exact same speed, and or stronger than the RAZR platform and the clamshell when it had ramped. From a promotion idea that is really a region-by-region kind of question and these devices support a whole lot of different value added services. We believe in the markets for Candy bars are strong which really now is much more limited than it was just a couple of years ago then these devices in the market that candy bars are strong, will get great promotional support.
A - Edward Zander
I am not a consumer market tier, but I'll tell you in the United States here I got a couple of them, I can get faxes to, I have couple of black one over Christmas and I got people stop here in the US, I would love to have the product so we may be seeing getting out in the market here quite a surprise for kindergartens the are a such a great spin, attract their product but, we could see some up side here.
The next question comes from the line of Edward Schneider of Charter Equity Research. Please proceed with your questions.
Q - Edward Schneider
Given the supply chain issue in the fourth quarter, I understand they are solved now, did your backlog grow faster than revenue in the fourth quarter and is your guidance for the fourth quarter, maybe can enlarge or modestly enlarge because of the backlog you are facing because of the supply chain?
A - Edward Zander
Ed, first of all, I really, you have stated it, I think, that is the heroes of Q4, given the supply chain issues we had three products out of $10.5 billion of revenue, in all of our areas connect-to-home, ship record numbers, Greg had record numbers, and the supply changed everything. And they give a billion job, I am not trying to be defensive, we had three products that where hot products that we had as Ron said some products, we also shipped 45 million almost handset, we don't want comment on backlog it is always hard to figure out, I said this the first quarter, I joined - if you remember something about Q4 to Q1. People buy things in the quarter preciously hold off until the next quarter, we did present a I think a very good Q1 set of numbers here, and Ron feels pretty good about his product line and I guess, I will leave at that unless you want to say anything.
The next question comes from the line of Tim Long of Banc of America. Please proceed with your question.
Q - Tim long
Just on the handset margins again, ASPs up 3% sequential yet I guess if you actually charge this from last quarter and this quarter looks like a flat overall operating, if the revenue grew 16% 17%, can you talk about some of the reasons for that with their special marketing programs, whether it is the 3G impact or the supply, I also assume that Codec was the only real big change in the quarter. Maybe if you can comment as to what is strong revenue and ASP and what contributed to flat sequential Op margins.
A - Gregory Brown
If you look at the set of products that we brought out into the market in Q4, clearly when you bring 26 new product into the market, you need to be able to ramp and launch into the market each and everyone of them and you have the upfront cost, in addition to that two very strategic markets to us. Both the India market, and the China market. We invested heavily in the Q4 on a marketing distribution perspective in order to be able to set up a strong and continuing business in 2006. At the exact same time, the rich experiences that we are talking about whether with Yahoo, of Google or Codec requires that our Linux Java platform be very very robust to be able to support the launch of those devices. So we got out 26 new products, we ramped those 26 new products at the same time we invested heavily, year-over year our O/E percent expanded significantly along with the 2% market share gain and sequential we kept at a 11% O/E, we think that was a pretty good effort.
A - Edward Zander
And I have two more good points here, one there was an increase R&D investment in Q4 versus Q3 in mobile devices that also was driven by the need to support future growth in 2006 and beyond, so the increase in volume has to, is that the only thing that leverages the bottom line, you also have to take into account the increase in our reinvestment, but we choose to make it in the fourth quarter, and then a clarification, in reference to Codec, Codec was the only special item in the mobile devices, results in the quarter, it was about 60 million charge, it was in cost to sales for the mobile devices business. There were no other special items in this segment in this quarter.
A - Gregory Brown
As I said before, the philosophy of the company is, we are going to keep investing but and grow O/E and enhance business, sometimes we will get a quarter like this, perhaps the year of shipment and the mixes unless we have said weren't exactly what we forecasted due to those three products but they are not going to necessarily, catch #1 we need to go keep the investments going and India and China, these emerging markets are critical for us. And you could see the results already in places like India and China and we also need go invest in R&D. we are going to move to this new platform based Java Linux, it is going to exciting, that it is going to allow us to do some amazing things and services so. We are investing and we are growing and from time to time, I think quarter over quarter, quarter will be year over year, you may see some of these as you said flat Q4 to Q1. but overall business is strong and I hope we are going in the right direction.
The next question comes from the line of Ehud Gelblum from J.P.Morgan, please proceed with your questions.
Q - Ehud Gelblum
First clarification of the question, first, if you look at the network division and the revenue, the differed revenue that happen there, can you give us a little bit more color on the technology mix in the differed revenues and what actually moves when how that moves into Q1, and on the clarification did I miss usually give ASP comments on ASP on the handset mobile device position in handset this quarter. Usually that is part of your guidance.
A - Edward Zander
As I said, things were up 3% in the quarter, as we said ASP increased sequentially in Q4 versus Q3 by almost 3% and then we said that we expect solid ASP performance in Q1 versus Q4, we weren't anymore specific relative to change on that front. We got into the differed question, we are not giving any detail by technology on increased differed revenue. We recognize revenue with first, looking at the nature of the contract that we have the contract that did take revenue recognition as well as general accepted accounting practices, we are extraordinarily careful of how we apply general accepted accounting practices and differed revenue when appropriate so forth. Did you have another question after that?
Q - Ehud Gelblum
Can you give us a break down of geography perhaps, as far as revenue -
A - Edward Zander
No, no break down of the differed revenue.
A - Gregory Brown
That is connecting with differed revenue.
Q - Ehud Gelblum
Having strike out three times in a row when you said that the mobile devices would decline less than seasonally in Q1, can you specifically define what you mean by seasonal historically but it moves around, what you consider seasonal?
A - Edward Zander
What we are talking about the industry has a specific patter of Q4 to Q1. You have that data I am sure as to many other on this call, so you know what the normal seasonalities of the industry is, what we are saying is we are expecting a seasonality in our business, typical sequential decline that occurs in Q1 versus Q4 to be less in our business than you will see in the industry Q1 versus Q4. Hence a sequential market share gain in mobile devices is what we expect. Next question please.
Next question comes from the line of Mike Walkley, Piper Jaffray. Please proceed with your question.
Q - Mike Walkley
Great thanks, First it is 30 million Razor platform shipping, can you may be help us out on what you clearly cut in the lower end and give us a progress on your GSMA contract.
A – Ed Zander
Sure. The first phase of the GSMA contract ended on December 31st, and believe that we met the letter of the agreement in the GSMA contract and that our customers were delighted with our performance. On January 1 of this year, we began the second phase of the GSMA award, we also believed that we will able to execute that here in the first half of this year, and we look forward to bidding on the third leg of the GSMA award. Next question please.
The next question comes from the line of Brian Modoff, Deutsche Bank. Please proceed with your questions.
Q - Brian Modoff
Yeah one question and clarification, the question you obviously shipped a bit more on the thin forms that you are anticipating you are talking north of 10 million on the last conference you shipped almost 13. Given what you talk about with the launches will that imply and the fact that you said you don't really have anymore constraints on this products, will that imply that the thin line will be up sequentially in Q1. And then Ed, you gave us a 60 million on the Codec IP could you give us the rest of those numbers in terms of the dollar figures on Telsim and Larson etc., those extraordinary items?
A – Edward Zander
Those extraordinary items, let me try the extraordinary items and then turn over the ramp, the gain on Telsim shows up on a separate line on our corporate income statement, it is in other charges, and it was about, other charges other income, it was just about $500 billion, those of the only two items that effect operating earnings in terms of the volumes that we highlighted, there is a tax adjustments as well, which I will look up in a moment, and Larson, and sales and investment of $0.2. Suffice to say, which is also a separate line item on the income statement, so you can see that dollar moment as well. While Delaney answers your other question, I will look up the value on the value on the -
As we had expanded the Razor platform across foreign factors, across technologies, for four quarters in a row, we’ve doubled our thin line shipment for Q1 this year, Q2 of this year, Q3 of this year, Q4 of this year, to what we said was 30 million units, clearly another doubling of the numbers for the next year, eventually the same, you can keep continuing to do that obviously, what we do believe is that we will see significant demand across that product line and more thin line devices shipped in Q1, then we will ship in Q4.
A – Edward Zander
Brian, on slide 17 of our presentation this afternoon has all of the detail that you or anyone else will probably want on the significant items that we discussed in the quarter. Next question please.
The next question comes from the line of John Bucher, Harris Nesbitt. Please repeat the questions.
Q - John Bucher
You attributed the strong government enterprise margins to favorable mix and some cost reductions, I am wondering how much of this is temporary due to fiscal yearend budget spend versus mix in cost reductions that might be sustainable in 2006.
A – Ron Derricks
Clearly we saw continued strong demand in the public safety side of the house in Q4 as you know, Q4 is typically a seasonally heavier quarter than the others, and certainly that contributed to that but having said we really see strong straight local growth here domestically, in all internal theatre Asia, Latin America and Europe, very strong earnings growth and very strong top line growth, and as Ed mentioned we are now rolling product in the enterprise segment as well, our price mobility will exceed 700 which introduces the commercial off the shelf mobile computing market to us, so very strong trends across the board and obviously it is up to us to continue that performance in ’06.
The next question comes from the line of Wojtek Uzdelewicz from Bear Stearns. Please state your questions.
Q - Wojtek Uzdelewicz
Thank you. I guess if you could comment on infrastructure management that was a little weaker and I kind a look at that results from a loose end also weaker infrastructure performance appears to be wireless in China and the US. Any thoughts, what’s happening with the market in the bigger scope, and any needs of trans eastern wireless infrastructure and how do you see this playing out for the rest of the year?
A - Ed Zander
Yeah, this is Zander, Andrian couldn’t be with us today. Certainly we saw that announcement to some more competitors and it’s the slowdown of the market and people are now was, analysts are projecting mid-single digit growth for this year. We actually rolled up our numbers for the year and looked at the Q4 revenue short fall and it wasn’t bad and we actually had a pretty good US and very good in Europe and Middle-East Asia is waiting for a lot of, what’s going to happen with 3G and there is some, whatever over time not over here. Characterize it and set it on our statement I know you probably made it catch it is, we do believe it’s more or like a mid-single digit for the traditional wireless infrastructure numbers. We think we can grow at or above that number. We also believe in the investments we put in effect years ago around broadband, wireless, wireline and some of the service Blooming platforms are growing faster I think I have some numbers and be back and find them to give you an idea about where that stuff is going, so, once again I can’t find it. We -- Our broadband solutions business grew 65%, our wireline business not the small numbers but, 33% in some of the other new emerging business that number is like that. So, we're putting the lot of a return on investment in these new areas. I think that will bring really nice results in the outlying years. Perhaps, just a little bit of, people looking at capital and just holding whatever we have, we're waiting in Asia of course, for what's going to happen in China. But we feel okay actually, that's the agents teams felt pretty good about ability to grow at or above the market in 2006. But, I think it's called to be a single-digit growth market right now, where I can see in January.
A - Ed Zander
Next question please
The next question comes from the line of Tim Luke, Lehman Brothers. Please state your question.
Q - Tim Luke
Thanks. Two -- a couple of clarifications for both of you, Greg 17% operating margins in the government business, is there a framework now that it's going to be especially high teens operating margin business, or how should we view that going forward, and possibly you had a auto, weighing it down at least set us through that as a depressant on the margin there, it would seem that in the phone area is you have this mix that goes more than sequentially that this 11% level maybe a base in terms of the operating margin, or how should we view that it would seem that if you got the 26 new products or rampings then maybe some opportunity there in terms of your margin has got the mids we are going to stay with the higher end? Thanks.
A - Ed Zander
Greg, you are anxious to see advances, anxious just to see as the answers we were in budget print right now. So, Greg, could you just say is that credible?
A - Gregory Brown
So, Tim, I think you could traditionally look at this business with very, very solid O/E margin in generally the mid-teens. I know you know that typically as I mentioned in Q4 given the top line and we really had a strong Q4 in demand and that gives flow through can actually for the earnings yield. So, I think that's why in part, we had 17% plus. The other thing is you mentioned automotive. I'm really proud of the automotive team. We've had year-over-year flat revenues generally and yet significantly better earnings contribution from the automotive segment, which is -- distressed and there's no secret map from an industry perspective. But we really hunkered down the supply chain the R&D the portfolio management and the team has done a very good job of lowering the break even or right sizing that business if you will commence it with the lower demand. So, that's basically the color of the operating earnings.
From the O/E percent in the mobile devices business, when you look into year-over-year Q1 to Q1, Q2 to Q2, the key objective is to expand the market share while increasing O/E percent. In 2005, we said what we call a table stakes number that are being above 10% O/E every single quarter. In 2006, the team's objective is to have a table stakes at 11% O/E for every quarter and continue to try to do year-over-year, quarter-over-quarter O/E expansion.
A - Ed Zander
And I think, you know it's hard to give this guys, but I know you're out there trying to give these quarters out I'm sorry. But, with investments unless you pull up on investments we really have to take this, without doing anything in the dominant quarter on a year basis. And if you look at what we did in 2004, and how Ron moved moved up considerably in 2005, that's the way we have to play in here. Having said that, we're trying to read in a quarter, drive O/E growth and revenue in market share. It's just hard to call it every quarter, but for the year the commitments stand and we feel pretty good that this year in 2006, we can again gain more market share, again increase that O/E percentage number and of course, grow revenue faster than the competition. So, that's what our plan it looks like as we in 2006, and hopefully every quarter you can see those kinds of results. Next question please.
Next question comes from the line of Brant Thompson, Goldman Sachs. Please proceed with your questions.
Q - Brant Thompson
Hi, I was wondering if you could give us an idea of what are the factors that drives us between the high and the low end of the range for margins in the networking business over the next year. You are ramp provided investment, new opportunities, is that tends the investment if do you need to restart to grow out of some of that and get a little bit more leverage there, I was wondering if you could just walk through put and takes there? Thanks.
A - Ed Zander
Yeah. In spite of a revenue decline here, what a great job that team is doing in cost controls and redeploying energy. They turned in 15.1%. I think that's second in the entire competitive landscape and have once business maybe a wrong. But it's quite out there, and I just despite having the revenue decline. So, engineers team are managing, the cellular business which is, as I said single-digit yet. If you look at the canopy wins I mean I feel that mentioned there in Indonesia and places around the world that were installing canopy systems, the broadband wireless 802.16 stay tuned for that in terms of this year.
The wireline and fiber to the premises and some of the PON and eventually GPON technologies, and in the soft switch wins which I talked about around the world and it gives some investing for some of the 3G opportunities that we're going to see in China which I think we are well-positioned for. So, it's a balancing act. And but, I would give this picture to you.. It was like below 10% O/E by 15% O/E. Its pretty good that we can maintain that kind of earnings growth and yet too the kind of investments. To answer your question, you know we do like this year, I just said that we think that all of the growth in this business 50% this year which is way above from last year could come from these new investments that we did, we made three years ago, so as wireline picks up and the broadband wireless picks up as more Softswitch gets installed and the IMS, we do believe that’s a larger future, even though, you know iDEN continues to run along and there is places in the world that are getting connected with GSM technologies, you know, in other words we are going 3G in the world, there are a lot of places, lot of countries where there is great opportunities and as I’ve said earlier, the 3G opportunities that I think are going to be available for us with our install base and our customer relationships in China. So it’s a delicate balancing act of taking, and as just Ron said, Ron is converting effectively in the process of here in North America and Latin America, the core goal platforms to the SIM platforms, Craig is doing the same thing with what we announced here in terms of off the shelf mobile computing products versus proprietary one-off mobile computing products and things in the handheld area. Dan’s with the same thing, and he is investing heavily in some of the wireline IPTV and video technologies for the future and converting some of that, so I did say this two years ago when I said this at the Analyst Meeting we are accompanying that’s certainly then itself in transition and for that I need to keep R&D going. I need to invest in things that don’t have gladly today, when how we continue to grow the business and so far we have been able to do that, and we think this year we can do it again.
A – Ron Derricks
As put points, we have given you some information today about recent wins, it was our technology in broadband wireless and some recent wins with additional FTTP contracts, so we highlighted these things quite specifically to give you evidence of our increasing success of some of these emerging technologies. Next question please.
Next question comes from the line of Tal Liani from Merrill Lynch. Please proceed with your question.
Q – Tal Liani
Hi guys. My question is on the Connected Home. First Comcast made announcements of buying some set-top boxes from Samsung and Panasonic and the question thus is, how does it impact you from the economics point of view because you do get some licensing fees? And second, the bigger picture, Connected Home is, Cisco is buying your competitor there, and they offer some synergy of product to their customers on the home networking part, I am wondering what is your plan and what’s your response, so how should you respond to this move by Cisco? Thank you.
A – Dane Maloney
Let me start with the second half of that question. Dane Maloney by the way. If we take a look at the commentary around Cisco buying SA, I think if you remember back 6 years ago, there was a lot of questions around Motorola buying General Instrument and really where it was going and I think what we found is there are tremendous synergies to begin as Ed indicated on it and seamless mobility experience way together the home, the auto, the enterprise and work mobile environment. So what we see now is others following along in the same direction with Cisco wanting to expand their offering into the video space and around the Home. We feel we are very well positioned across Motorola being able to leverage both the wireline as well as the wireless space and bring those experiences out there, so we take both Cisco and SA as formidable competitors over the last several years and we will continue to do so as they come together this year. And we feel we will go in our share of the business in the future.
A – Edward Zander
Now back on the first part of your question relative to the announcement by Comcast, that should come as no surprise, we announced a year ago about our licensing arrangement with Comcast. They had indicated and we had indicated that there would be several other players coming into the space if you read through the specifics of those announcements, those are for our products that are anticipated to hit the market sometime in ’07. We also are working very aggressively with Comcast as our major customer on a whole array of new products. That will continue to launch throughout 2006 as well as into 2007 and we are very well positioned to win business on an ongoing basis. We have not talked specifically about the value of the licensing arrangement and the structure of that, I think we are going to keep it at that.
A – Gregory Q. Brown
You know I would like to – coming on announcements like Cisco’s – there are two competitors and not one, and you know maybe they are bigger but that’s okay, and we have got some tremendous presence, we have got expansion into the wireline area, stay tuned to that, we think its going to be pretty exciting around the world in this area and we are getting a lot of traction and to create up acquisition and Sweden is going to give us a great footprint in Europe, and on the second one the same thing, we announced unlike open systems, (indiscernible) compete on the playing field and this expanse the market. I think as we prove in the computing industry, the more you have more consistence the more you expand the market, and I think this is going to expand the market and allow till the end of playing a bigger playing field. Next question.
The next question comes from the line of Susan Kalla from Caris, please proceed with your question.
Q – Susan Kalla
Yes I am wondering if you could give us some ideas on what an update on that China 3G situation and also an update on what’s going on with Sprint Nextel?
A – Gregory Q. Brown
As far as China goes, I had been getting wrong now and every time for the last 3 years, so I don’t know whether you know probably as much as I do, now here hearing I mean what I read the second half of this year but you know, I don’t know, I think that’s was posted the first half of this year and then we spoke through the last half of last year so, but you know that’s Susan the very thought is – What’s the second question, Ron?
A - Ed Gams
Sprint Nextel update.
A – Gregory Q. Brown
I think it’s doing pretty well that going real well, we had a great quarter, and IBM set this quarter. IBM start to still continues to be a good revenue string for us, I think just going this year ago but there is a lot to do more in keeping the Nextel customers happy so the business continues to go along if you want the best push to talk on the plan today, its iDEN and its Nextel, and then Nextel customer, and there is an experience there that’s been hard to, I think it’s a – and I think the good news is that, and this is where Dan comes back in, as you know Sprint has signed a deal with the cable industry, to talk about Seamless Mobility and convergence between a home and broadband and wireless and what better company than Motorola is where it stayed right upfront, there is no other company that could sit down, not even the people you just mentioned on the previous question that can talk wireless, wireless devices and cable and talk about having rich experiences on video and music and data onto these devices and build out this Seamless Mobility experience so that’s playing well, and then the third area is to provide you know spread with some exciting devices as they go forward in today’s marketplace so I think it has been great for us because with Nextel and our presence in Nextel we are now into Sprint and a number of different areas and we are also working on the rebanding, maybe I will let Greg talk about.
A – Gregory Q. Brown
Yeah we formed a dedicated rebanding team within government enterprise mobility almost a year ago, we have been planning we have got significant resources with Coaed (Ph) as it relates to rebanding and what we’ve planned on from the schedule standpoint, we are actually ahead of our schedule in terms of necessary software upgrades and the associated planning within the individual communities, so its been going very well and we are poised to do the rebanding initiative with the SEC.
A – Edward Zander
I think you know I more I think about it, and Adrian is not here, we are also working with them on their deal next-generation infrastructure. Sprint Nextel is interesting because I just have a meeting then today, all four of my divisions would be at the table: the government division, the infrastructure division, a Home division, and Ron’s division, and again if you want to know where the future is going with wireless carriers, wireline carriers, cable carriers, enterprise carriers. Now well I could bring my four divisions in and talk about Seamless Mobility, you know that’s really I think the competitive edge. It is as much as I like to think it’s a think – it’s this question that really defines I think the future for Motorola and what we are executing here.
A - Ed Gams
And we have time for one last question.
Next question comes from the line of Matthew Hoffman from Moors & Cabot, please proceed with your question.
Q – Matthew Hoffman
Thanks Ed and Ron, question on handsets here, it looks like you have given us a nice breakout of your handset market share globally for the year and you are calling your market share flat quarter-on-quarter, was obviously to the same type of regional breakout on your market share, Q3 to 4Q? Thanks.
A – Edward Zander
Market share was up.
A – Gregory Q. Brown
You know market share was up half a point Q3 to Q4, what was the question I am sorry?
Q – Matthew Hoffman
Okay, you probably called it a 19 last quarter, could you give us the regional breakout quarter-to-quarter the trend there?
A – Gregory Q. Brown
Basically we log on to the No.1 position in North America and in Latin America where the half a point growth basically came from as we had nice growth in the other three regions specifically taking over the No.2 position in the North Asia market.
A - Ed Gams, Senior Vice President, Investor Relations
Thank you very much. During this call we’ve made a number of forward-looking statements, forward-looking statements are indications that are not historical facts. These forward-looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations would prove to be correct. Such forward-looking statements include but are not limited to our comments and answers related to the following topics, guidance for Motorola sales and earnings per share for the first quarter of 2006. Motorola’s expected effective tax rate and share outstanding for the first quarter 2006, expectations regarding the volume and impact of our stock repurchase program, Motorola’s expected stock option expense in 2006, expected gains from the sale of investments in 2006, future sales, profitability, operating earnings, operating margin and market share for each of Motorola segments, expectations for Motorola’s future operating margin and various factors and its improvement, expected timing for the enhancement launch and shipment of new products, the sales impact and pricing of new products, expectations for the size of the worldwide handset and infrastructure markets, and the timing of the cell phone collection. These forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from those stated in the forward-looking statements. Information about factors that could cause these differences can be found in this afternoon’s press release on pages 70 through 80 in Motorola’s 2004 Annual Report and Form 10-K and in Motorola’s other SEC filings. Thank you very much for participating in this conference call.
Ladies and gentlemen that does conclude the conference call for today, we thank you for your participation and ask that you please disconnect your line.
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