Moto profits under pressure

Investors and analysts will be looking to Motorola head honcho Ed Zander later on Friday after the company’s disappointing performance in the fourth quarter.

Zander issued a profit warning earlier this month after the company experienced poor performance in the devices segment during the last quarter of 2006.

Fourth quarter sales were up 17 per cent year on year at $11.8bn but this was against previous guidance of $11.8bn to $12.1bn. Net earnings for the period were down from $1.2bn in the fourth quarter 2005 to $624m in 2006.

“As I said earlier this month, we are disappointed with our fourth quarter operating earnings performance. However, the company generated strong revenue growth and met or exceeded our goals in many areas during the quarter,” said Zander. “Looking at the full year, I am pleased with our progress,” he added.

Fourth quarter operating earnings for the Mobile Devices unit were $341m, compared $663m in the year ago quarter, due to an unfavourable geographical and product-tier mix. In terms of handsets sales, the vendor has come under increasing pressure from first place Nokia and third placed Samsung, particularly as the success of the RAZR has worn off and the company has not come up with a comparable successor.

However, over the full year, handset sales increased 32 per cent and operating earnings increased 23 per cent. Motorola shifted a record 217.4 million units during the year, up 49 per cent versus 2005.

The company’s global annual handset market share climbed 4.3 percentage points to 22.2 per cent, keeping the company in a firm second place behind Nokia.

Overall net earnings for the full year were down to $3.6bn from $4.5bn in 2005.


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