Motorola squeezes out profit despite struggling handset business

There’s no doubt that Motorola (NYSE: MOT)’s handset manufacturing business is on the ropes. Following on quarter after quarter of multi-million dollar losses and sliding global market share, Motorola has been trying to shore up its mobile phone division in an effort to gussy it up for a potential investor to come in and sweep it off its feet, so to speak. But, until now, Motorola’s faced a losing battle.

Today, things are looking a bit brighter for the No. 3 handset vendor. They’ve posted their Q2 2008 financials with a surprising twist – there’s profit in their books! Motorola has reported $8.1 billion in revenue, down from $8.7 billion in the same quarter last year. More importantly, Motorola’s net profit hit $4 million, which is a stark departure from the $28 million red-ink stain that Moto marked down last year. And, Motorola projects that they’ll be ending the year in profits.

Motorola beat Wall Street estimates of $7.69 billion in revenue, and the stronger than expected revenue gave Moto’s stock a much needed boost. Motorola CEO Greg Brown stated that the positive financial report indicates a massive turnaround for the company.

“We’ve pushed out enhanced products and put new leaders in key roles this quarter,” Brown said. “I’m confident that we are in a better position with mobile devices to compete and succeed.”

Still, Motorola’s handset business has failed to cross over in to the black. The mobile phone division reported Q2 2008 revenues of $3.3 billion, down 22% from the same period a year ago. Profits were again non-existent with a whopping $346 million loss – a greater loss than the $332 million that Moto’s handset division lost last year.

Motorola is solidly still in a transition period, and could very well rebound from their too-long decline in the mobile space. The company is concentrating on launching new devices around the world, but only time will tell if their strategy is enough to spark a turnaround. Innovation in handset technology and design is an area where Motorola is critically lacking. And, with the handset division still without an executive to lead it back to profitability, the company is in for an uphill battle.

[Via: RCRNews]