Qualcomm Inc (QCOM)

[Mindy]

UPDATE - Motorola profit triples on strong handset sales
Tuesday April 20, 7:16 pm ET
By Ben Klayman

http://biz.yahoo.com/rc/040420/tech_motorola_earns_5.html

(Recasts first sentence, adds CEO, analysts comments, background)
CHICAGO, April 20 (Reuters) - Motorola Inc. (NYSE:MOT - News) on Tuesday said quarterly profit tripled as it stole market share in handsets from rivals, sending its shares up 25 percent as it blew past Wall Street's expectations.

ADVERTISEMENT


The world's second largest cell-phone maker also forecast second-quarter results that dwarfed analysts' estimates, and its results gave a broad boost to shares of wireless technology and equipment companies.

"That's the biggest blow-up on the upside I've seen from any large cap company," Bear Stearns analyst Wojtek Uzdelewicz said on the company's conference call. "We can all be skeptics, but you have to get credit for the numbers there."

Motorola, based in the Chicago suburb of Schaumburg, Illinois, reported a first-quarter net profit of $609 million, or 25 cents a share, compared with $169 million, or 7 cents a share, in the year-ago quarter.

Excluding one-time items, it earned about 18 cents a share, topping analysts' expectations for 7 cents, according to Reuters Research, a unit of Reuters Group Plc.

Sales in the quarter rose to $8.56 billion, far above the $6.76 billion analysts were expecting according to Reuters Research and the highest level in four years. Motorola's sales were 42 percent above last year.

"Motorola's results did not just surpass our estimates, consensus and management guidance, these (first-quarter) numbers were downright huge," Loop Capital analyst Ren Zamora said. "Honestly, we are scratching our heads about such a big beat."

Analysts said Motorola benefited at the expense of larger rival Nokia, which disappointed investors on Friday when it admitted that cheaper, funkier phones from rivals were eating into its market lead.

Motorola and its rivals have suffered a slowdown in demand for mobile telephones and wireless equipment over the past couple of years, but demand has picked up thanks to the popularity of phones with such features as color screens and integrated digital cameras.

Motorola's cell-phone unit saw sales surge 67 percent from last year to $4.1 billion, while earnings more than tripled due to the success of those new products. It shipped a record 25.3 million handsets in the quarter, up 51 percent from last year, and improved its market share, particularly in Europe.

The average selling prices of Motorola's cell phones rose a healthy 12 percent from the historically strong fourth quarter, and it expects sales in that unit to surge another 60 percent to 80 percent in the second quarter while operating margins rise.

The results show the diversified maker of electronics used to run everything from phones to cars to cable TVs has apparently corrected some of the problems that plagued it recently, analysts said. Last fall, it missed the critical holiday selling season with some wireless operators as parts shortages delayed deliveries of some camera phones.

Chairman and Chief Executive Edward Zander has emphasized improving the company's execution in that area, and said in February it was poised to gain global market share if it could speed delivery of its phones.

"We took an hour off and congratulated ourselves, but we've got a lot more work to do," Zander, who assumed leadership of Motorola in early January, said on the conference call with analysts on Tuesday.

Motorola also forecast second-quarter sales of $8.2 billion to $8.6 billion and earnings excluding the impact of the planned initial public offering of its semiconductor unit of 14 cents to 18 cents a share.

Analysts were expecting second-quarter sales of $6.92 billion and earnings before one-time items of 9 cents, according to Reuters Research.

Motorola shares surged to $20.25 in after-market trading on INET from the Tuesday closing price of $16.22 on the New York Stock Exchange (News - Websites) . The last time Motorola topped $20 was in February 2001.

Among the other wireless stocks rising on the news were Qualcomm Inc. (NasdaqNM:QCOM - News), RF Micro Devices Inc. (NasdaqNM:RFMD - News), Texas Instruments Inc. (NYSE:TXN - News), and Ericsson (NasdaqNM:ERICY - News). (Additional reporting by Ben Berkowitz in Los Angeles)