Motorola, Apple's PowerPC partner and manufacturer of G4 chips, matched Wall Street expectations today, posting third-quarter earnings of $332 million - or 53 cents per share. This is up from earnings of $40 million - or 7 cents per share - for the same quarter last year.
The results are based on sales of $7.7 billion in the quarter ending October 2 - up from $7.2 billion in the same period last year.
Motorola’s increased profits are attributed to strong sales, this quarter, of digital wireless phones, and the restructuring of the semiconductor and digital communications business. Analysts polled by First Call estimated Motorola would post a profit of 53 cents per share.
Motorola's sales in the personal communications area reached $3.1 billion, up 37 per cent from the same period last year. Semiconductor products sales were $1.6 billion, up 11 per cent from the same period last year. Government, commercial and industrial segment sales were $1 billion, up 5 per cent from the same quarter last year. Conversely, network systems sales declined to $1.6, down 17 per cent from the third quarter of last year.
"The personal communications group came through for them," said Pete Peterson, an analyst with San Francisco investment bank Volpe, Brown, Whelan & Company. "Particularly strong were digital handsets, which accounted for 89 per cent of all wireless phone sales for them." This was due, in large part, to the performance of the personal communications division, with $140 million in operating profits.
Motorola's restructuring of its semiconductor division during the past two years has paid off, said Allen Leibovitch, an analyst with International Data Corp. in Mountain View, California. "They've segmented the semiconductor business by markets and done a good job of leveraging their new technology across those markets."
The weakest performing area, network systems is attributed to Motorola's investment in Iridium, the satellite communications company that recently filed for bankruptcy protection. Motorola recorded a special charge of $944 million in the quarter, and may take additional charges in the fourth quarter, the company said.
Motorola shares on the Nasdaq stock exchange closed at $94.93, down $1.68, or 1.75 per cent.