Motorola rings up USD1.2bn in profits
20-01-2006
by Ciara O'Brien

Mobile manufacturer Motorola increased its earnings by 86 percent in the fourth quarter, but analysts were left disappointed after it missed sales estimates.

The firm rang up a net income of USD1.2 billion in the quarter, up from USD647 million a year earlier, but even that wasn't enough to satisfy analysts. Despite the surge in earnings, sales only increased by 18 percent to USD10.4 billion; analysts had been expecting in the region of USD10.5 billion.

Motorola is rated as the world's number two handset provider with Nokia currently claiming the top spot. The latest results will help bridge that gap a little, while ensuring that Motorola stays ahead of the rest of the pack. Revenue in the mobile handset division was up 30 percent, reaching USD6.5 billion.

The handset manufacturer has had a number of successes with its newest handsets, including the Razr, which have helped it to increase its market share to 19 percent worldwide. The firm shipped more than 44 million handsets in the quarter ending December 2005 -- an increase of 40 percent on the year before.

However, its latest success has also caused some problems, with supply issues causing concern among analysts and investors. Difficulty in sourcing some components for the phones resulted in lost earnings -- particularly over the busy seasonal period -- and has made some investors nervous.

Analysts are also speculating about whether Motorola can maintain the momentum during 2006. The mobile firm is confident it can, but with increasing competition on the market, it could be in for a tough battle.

The firm has already made several alliances in a bid to entice customers to its handsets, including an iTunes phone with Apple and a new deal that gives easy access to Google's search facilities.

Meanwhile, Motorola's other sectors delivered a mixed bag of results. In its government unit, earnings rose 41 percent, with the connected home seeing a similar rise at 40 percent. However, the firm's networks segment saw earnings drop by 18 percent.

Looking ahead, Motorola has predicted sales of between USD9.3 billion and USD9.5 billion in the first quarter of 2006. This forecast is in line with Wall Street estimates but still not enough for some analysts, who were expecting up to USD10 billion.