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4/29/2010
12:22 PM
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Motorola Posts 1Q Profit

Strong sales of the Droid smartphone by Verizon Wireless were a bright spot.

Motorola turned in a profit in its first quarter as sales of the firm's Droid handset surged ahead of expectations to 2.3 million units sold, but the rest of Motorola's mobile phone portfolio slumped. Overall, the Mobile Devices and Home unit lost money, but the Enterprise Mobility Solutions and Networks businesses supplied enough profit to prop up the company's earnings.

The company reported sales of $5 billion for the first quarter -- down 6% from last year's first quarter -- while earnings were $69 million compared to a loss of $291 million in 2009.

The profit was a surprise along with the strong showing of the Droid, but the results indicated the company still will be challenged as it seeks to pull out of a long slump. Motorola pioneered the mobile phone business and was its dominant supplier for years, but now it ranks in the seventh or eighth position in mobile phone market share.

Motorola is positioning the company for a breakup of the two operations in the first quarter of 2011 and Enterprise Mobility Solutions and Networks is showing renewed strength under the leadership of co-executive CEO Greg Brown.

Sanjay Jha, co-executive of Mobile Devices and Home, said he expects the phone business will be profitable in the fourth quarter -- just in time for the firm's breakup.

Jha appears to be betting on continuing strength in the company's smartphone category a well as convergence in smart phones and home entertainment devices and services.

"We continue to execute on our business strategy, build momentum in smart phones, and improve our operating performance," said Jha in a statement. "The Mobile Devices and Home businesses are uniquely positioned to capitalize on the convergence of mobile experiences and home entertainment."

While the Droid continues to sell well at Verizon Wireless, a new threat looms next week when HTC's Droid Incredible is slated to appear in Verizon stores, ready to steal the marketing thunder from the Droid. Both the Droid and the Droid Incredible are based on Google's Android platform and both Android phones are likely to remain popular in an increasingly crowded smartphone marketplace. AdMob recently reported that the Droid accounts for 32% of Android traffic.

Motorola's Enterprise Mobility Solutions and Networks segments supplied the profits even if the units don't have the glamour of the mobile phone segment. The units continued to churn out profitable products ranging from LTE and WiMax gear to public safety products. The Enterprise Mobility Solutions unit noted that it has been awarded a German Federal Ministry of Interior TETRA terminal contract for more than 50,000 terminals.

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