Motorola Inc on Thursday posted third-quarter earnings above Wall Street estimates and forecast a profit for the fourth quarter, raising expectations the mobile handset maker had begun to turn its business around.
Shares of Motorola, which had posted losses for the first two quarters this year amid market share losses to handset rivals, rose 4.6 percent in premarket trading to $19.40 from its Wednesday close of $18.55.
American Technology Research analyst Mark McKechnie said Motorola had cut costs faster then expected, but that investors would be anxious to see more improvements in handsets.
They're doing what they said they were going to do. They're doing good but not great, he said. It's decent progress for a company in turnaround mode,
Motorola's third-quarter net profit was $60 million, or 3 cents a share compared with $968 million, or 39 cents a share in the year ago quarter.
Profit from continuing operations was 2 cents per share, including charges of 4 cents a share from job cuts and asset write-downs.
Excluding the charges, Motorola was 2 cents ahead of the average analyst estimate of 4 cents a share, according to Reuters Estimates.
Our third quarter can be characterized by one word, progress, said Chief Executive Ed Zander on a conference call with analysts. We also recognize there is a lot more work to be done.
Revenue fell to $8.8 billion from $10.6 billion, in line with average analyst estimates, according to Reuters Estimates.
FURTHER PROFITS EXPECTED
It forecast fourth-quarter earnings per share from continuing operations of 12 cents to 14 cents, excluding any reorganization charges or other items.
Analysts had on average expected earnings of 11 cents per share for the fourth quarter, according to Reuters Estimates.
Motorola shipped 37.2 million cell phones in the quarter, giving it an estimated market share of about 13 percent. Estimates ranged from 35 million to 38 million from three analysts contacted by Reuters.
The company's handset business posted an operating loss of $138 million compared with a profit of $843 million in the year ago quarter. Mobile phone revenue fell 36 percent to $4.5 billion.
It has been losing market share to market leader Nokia and Samsung Electronics, which took its No. 2 ranking in the second quarter, and also faces competition from Apple Inc's iPhone.
Motorola said revenue for its set top box and network equipment business increased 6 percent from the year-ago quarter. Its enterprise business posted a 47 percent revenue increase to $2 billion.
Shares of Motorola, which has been criticized for failing to come up with a strong successor to its flagship Razr phone, have lost almost a third of their value over the last 12 months.
(Reporting by Sinead Carew)