Motorola Inc. predicted fourth- quarter profit that may exceed analysts� estimates after job cuts helped the biggest U.S. mobile-phone maker beat projections for the previous period. The stock jumped as much as 10 percent.
Profit, excluding some costs, will be 7 cents to 9 cents a share, Schaumburg, Illinois-based Motorola said today in a statement. Analysts in a Bloomberg survey projected 6 cents. Third-quarter profit on that basis was 2 cents a share, exceeding the average prediction for a breakeven quarter.
Motorola has eliminated at least 8,000 jobs since December and shuffled executives after posting losses of more than $4 billion over the past two years. The company aims to recover market share lost to Apple Inc.�s iPhone and Research In Motion Ltd.�s BlackBerry by introducing phones that run Google Inc.�s Android software, including the Droid and the Cliq.
�They have been very effective in cost cutting and the Droid really is the best device Motorola has come up with since 2005,� said Tero Kuittinen, an analyst at MKM Partners LP in Greenwich, Connecticut, with a �sell� rating on the stock.
Motorola rose 71 cents, or 8.9 percent, to $8.67 at 9:49 a.m. on the New York Stock Exchange, after reaching $8.76. Before today, the stock had climbed 80 percent this year.
Droid, Cliq
Net income was $12 million, or 1 cent a share, after a loss of $397 million, or 18 cents, a year earlier. Job cuts helped Motorola reduce production costs by 36 percent to $3.65 billion.
Revenue dropped 27 percent to $5.45 billion. Analysts predicted $5.54 billion on average.
The company also named Edward Fitzpatrick chief financial officer, effective immediately. Fitzpatrick, 43, had been Motorola�s acting CFO since February.
Motorola�s share of the global mobile-phone market dropped by almost half in the second quarter to 5.6 percent, according to Stamford, Connecticut-based research firm Gartner Inc. Apple and RIM gained, helped by increasing demand for phones that surf the Web, send e-mail and shoot video.
Revenue at Motorola�s mobile-phone business fell 46 percent to $1.69 billion in the third quarter, as shipments plunged by almost half to 13.6 million handsets. The division�s operating loss narrowed to $183 million from $840 million.
Yesterday, Motorola introduced its second phone based on the Android software, the Droid, after unveiling the Cliq last month. Both cost about $200 on a two-year contract and go on sale in November for the holiday shopping season.
Networks, Set-Top Boxes
The Droid features a larger screen than the iPhone and allows users to run multiple applications at once. The device gets Motorola back in the market for high-end phones, from which it has been missing, co-Chief Executive Officer Sanjay Jha, who runs the mobile-phone unit, said in an interview this week.
�This is a rebuilt company, with new leadership and a new platform,� said Matt Thornton, an analyst at Avian Securities LLC in Boston. �If these guys are successful in making the transition to be a smart-phone player, the next four to six quarters could show some marked improvement.� Thornton has a �positive� rating on the stock.
Motorola�s smart-phone sales will be a �significant driver� of its financial performance next year and the majority of phones introduced in 2010 will be Android devices, Jha said on a conference call with analysts today.
�I will be surprised if we don�t break even in at least one quarter in 2010,� he said, referring to the mobile-phone unit.
Motorola�s other units are run by co-CEO Greg Brown. Profit at the home-entertainment unit, which builds television set-top boxes, fell 24 percent to $199 million as sales fell 15 percent to $2.01 billion.
The enterprise mobility unit, which sells bar-code scanners to retailers and supplies emergency and police departments with walkie-talkies, reported a 24 percent drop in profit to $306 million, as sales fell 13 percent to $1.77 billion.
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