Moto's quarterly profits plummet 48pc
19-01-2007
by Emmet Ryan

Motorola, the world's second largest mobile phone company, has revealed a dramatic fall in profits for the fourth quarter.

The company released its results for the three-month period ending 31 December and the full year, on Friday. Profits for the quarter dropped 48 percent compared with the same period in 2005. The Illinois-based mobile firm recorded profits of USD624 million for the quarter, down from USD1.2 billion the previous year. This represents earnings per share of USD0.25, compared with USD0.47 for the fourth quarter of 2005.

The performance of the mobile phone unit was a particular cause for concern with the division's profit margin dropping to 4.4 percent, down from 12 percent in the third quarter. The poor showing comes on the back of a three-month period that's seen Motorola's share price drop 28 percent as the firm cut prices in a bid to remain competitive.

"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. I am confident that we remain well positioned for continued growth and success," said Ed Zander, chairman and chief executive of Motorola.

Earlier this month ENN reported that the firm's management had warned investors that fourth quarter results would not meet analysts' estimates.

Motorola's full year results paint a prettier picture for shareholders with sales of USD42.9 billion, representing a 22 percent increase on 2005. The mobile phone giant shipped 217.4 million handsets in 2006, a 49 percent increase on the previous year.

"Looking at the full year, I am pleased with our progress. Our business remains solid, and we will continue to execute on our focused, strategic plan to create value for our shareholders. We remain committed to increasing our profitability, while delivering compelling new products and solutions to our customers in 2007," said Zander

With Nokia comfortably out in front as market leader in the mobile phone market, second-placed Motorola is feeling the heat from the chasing pack. Sony Ericsson's latest results, which were announced Wednesday, have seen it close in on Samsung in third place. Sony Ericsson announced a fourth quarter profit of EUR502 million, its best performance in this period since the companies began the venture in 2001.