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10/28/2010
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Motorola Rides Android To Profitability

Third-quarter financials boasted the mobile unit's first profit in three years, spurred by sales of its smartphones.

Barnes Motorola Droid X
(click image for larger view)
Motorola Droid X

Riding the success of several Android handsets, Motorola's cell phone unit reported its first profit in three years as the company dressed up its financials in preparation for splitting the company in two early next year.

The third-quarter report, announced Thursday, also featured a 6% sales increase to $5.8 billion for the entire company. Already scheduled to shed its mobile network infrastructure to Nokia Siemens Networks for $1.2 billion, Motorola has committed to next year's breakup because its dominant investors believe the parts of the company broken up will be worth more than the whole.

The best -- and most surprising -- news in the report was that the phone unit shipped more than 9 million devices. The company said it has introduced 22 smartphones this year and 3.8 million of them were shipped in the last quarter.

"In the third quarter, Motorola Mobility showed positive momentum across the business, with Mobile Devices reaching profitability for the first time in over three years and [the Home operation] continues to maintain its leadership position," said Sanjay Jha, Motorola co-CEO and Motorola Mobility CEO, in a statement. "As we continue to make progress across the organization, we remain focused on further improving our financial results and pursuing the delivery of best-in-class software and hardware experiences to consumers and business users."

Jha was brought in from Qualcomm two years ago to staunch the bleeding and redirect Motorola's cell phone operation after it had been knocked off its pedestal by a brace of handset makers led by Nokia and Samsung and more recently by Apple's iPhone and Research in Motion's BlackBerry.

Jha said Motorola's recently announced Droid X is selling "extremely well" along with the company's Droid Pro.

Motorola's major sales agent is Verizon Wireless, which markets several Motorola Android phones. Their partnership may be facing a new problem, however: With Verizon widely reported to be preparing to offer Apple's iPhone, will Motorola's Android phones take a back seat to the popular iPhone?

In an analysts call after the Motorola earnings were announced, Jha said he believes Verizon will continue its investment in Motorola phones, although he didn't give any specifics on the number of Motorola phones that Verizon has been selling.

Motorola's other main unit -- Enterprise Mobility Solutions -- reported a 9% sales gain year-over-year to $1.9 billion. The company said its old iDEN infrastructure business is now bundled into the unit as the once high-flying operation continues to tamp down.

Enterprise Mobility Solutions noted that it had landed important contacts in the quarter, including a $50 million federal government grant to expand broadband access in the San Francisco Bay area.

"In enterprise markets," said Greg Brown, Motorola co-CEO and Motorola Solutions CEO, "we continued to experience double-digit sales growth in all four geographic regions we serve. Additionally, our public safety business remains resilient."

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